Term paper

On

Case Studies on Compensation Management relevant Issues

 East West University

Term Paper on
Case Studies on Compensation Management relevant
issues

Course Code: HRM 412 (Section 02)

Course Code: HRM 412

Course Title: Compensation Management
Semester: Summer 2020

Submitted for
Tamanna Parvin Eva
Senior Lecturer
Department of Business Administration
East West University

Submitted By
Name ID Participation

Department of Business Administration

East West University

Letter of Transmittal
Tamanna Parvin Eva
Senior lecturer
Department of Business Administration
East West University
Aftabnagar. Dhaka-1212, Bangladesh

Subject: Term Paper on Case Study of Compensation Management Relevant issues

Dear Ma’am,

It gives us immense pleasure in submitting to you the Term Paper on “Case Study of
Compensation Management relevant issues” which focus on incentives, external competitive
pay packages, benefits that improve employee performance.

While preparing the report, we closely focused on the Compensation management relevant
issues & tried to assimilate and to provide the most complete information available. We believe
that it will provide a clear scenario of the compensation strategy for employees that will ensure
competitive advantages and improve performance

We thank you for allowing us to do a term paper on case study. This will give us an experience
which we can use in our professional life. We will be always available for any further queries
and to answer any questions on this report.

Sincerely
Department of Business Administration
East West University
On the behalf the Group

ii
Acknowledgement
This Term paper is the result of group work, which is assigned by our honorable faculty
Tamanna Parvin Eva, Senior Lecturer of East West University in the course “Compensation
Management” (HRM 412). I would like to express my utmost gratitude and wholehearted
appreciation to all those who helped me and provided the opportunity to complete and present
the term paper.
First of all, I would like to thank my honorable, Tamanna Parvin Eva, Senior Lecturer,
Department of Business Administration, East West University for providing me with the
opportunity to observe and analyze such an interesting topic on Case Study of Compensation
Management relevant issues and for her supervision, relentless guidance and invaluable advice
whenever needed.
To complete the assign task, we have taken assist from different books and websites which
gives us great help in our research.

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Executive Summery
This term paper is a case-based term paper. The Case Studies on Compensation Management
relevant Issues. There are three cases related to incentives, external competitive pay package
and benefits. In this term paper we also describe different types of incentives and their impact
on organizational performance. We focus on the importance of paying competitive base pay
and different types of benefits. We included literature review, case summary, case analysis and
findings part in this term paper, and added some recommendation. It is a case-based term paper
so, we have collected data from textbook, internet and help of research paper. By doing this
term paper we get enough knowledge about different compensation management relevant
issues.

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Table of Contents
1. Introduction ................................................................................................................................... 6
1.1.1. Origin of the Study .............................................................................................................. 6
1.1.2. Background of the study ..................................................................................................... 6
1.2. Objective of the study .............................................................................................................. 6
1.2.1. Main Objective ................................................................................................................ 6
1.2.2. Specific Objective ........................................................................................................... 6
1.3. Methodology of the study ............................................................................................................. 7
1.4. Limitation of the study ............................................................................................................ 7
2. Literature Review ......................................................................................................................... 8
3. Analysis ............................................................................................................................................ 12
3.1 Summery of case.......................................................................................................................... 12
3.1.1. Case 1 .................................................................................................................................. 12
3.1.2. Case 2 .................................................................................................................................. 12
3.1.3. Case 3 .................................................................................................................................. 13
3.2. Analysis:..................................................................................................................................... 14
3.2.1. Case 1: Alterations in compensation at SK Superior .......................................................... 14
3.2.2. Case 2: Improved Pay for Performance Plan ...................................................................... 16
3.2.3. Case 3: Intended Benefits at KYO Japan ............................................................................ 18
4. Findings........................................................................................................................................ 21
5. Conclusion and Recommendation ............................................................................................. 22
5.1. Conclusion ............................................................................................................................ 22
5.2. Recommendation ................................................................................................................... 22
References ............................................................................................................................................ 23

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1. Introduction

1.1.1. Origin of the Study

The Term paper on Case Study on compensation management relevant issues provided in the
course HRM412 by the respectable faculty Tamanna Parvin Eva is an academic exercise which
will assist us to know the relevant issues and strategic criteria about compensation
management. The compensation factors, motivation criteria and strategy of utilizing Human
resource with pay packages and benefits will be the source of our learning which we can use
to enhance our career in HR.

1.1.2. Background of the study

As there are three cases based on the term’s incentives pay for performance, career banding ,
pay package based on external competitiveness, types of benefits and its advantages which
organization use to be effective in changeable market situation. An effective Human resource
planning conduct all aspects of pay packages and benefits, career development strategy to
make the workforce more useful to the organization.

1.2. Objective of the study

1.2.1. Main Objective

The main objective of the report is to know different company cases based different changing
situation in the competitive market and employee performance-based pay which engage
employees with organization objective achievement.

1.2.2. Specific Objective

The specific objective of this term paper is given below:

• To fulfill the requirements of the course HRM 412
• To analysis the cases and gathered detailed information about the topics.
• Providing an overview of Different pay packages, pay ranges, different benefits that
enhance the organization strategic goals with efficient employees.
• To find out the external competitiveness and employee competitive behavior of the
employees of company.
• Finding the effects of benefits, pay packages on organization and employees’
performance.

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1.3. Methodology of the study

This term paper has been made by the help of the guideline and resources from the course
(HRM412) Compensation Management. And I have gathered other information from
secondary internet resources
• Websites, journal activities
• Articles, Reports
• Books

we collect data from different secondary sources and study the cases among ourselves based
on the learning from the course Compensation Management, after discussion we have done our
analysis and found some specific solution for the given problems.

1.4. Limitation of the study

For doing the term paper, we have faced some constraints or limitations which are following:
1.4.1 The problems we had to face while making the report

• Lack of specific information because of confidentiality.

• Lack of direct observation of actual data use of the pay package’s and pay ranges and
benefits that .
• Lack of resources in the critical situation of Covid-19.

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2. Literature Review

Pay for performance: Pay for Performance is defined as the degree to which workers are
compensated over time. Pay varies favorably with results, calculated as a combination of
performance indicators of individuals or groups. (Gerhart, 2017). Performance-based pay can
minimize employee turnover (Thomas, 2012)

It is practice that certify employee performance and based on that performance they are paid
pay mix with their basic salary they are agreed on. The organization who are more risktaker,
unique and productive they choose the pay for performance approach by (Cadsby et al., 2006).
Performance can be measured through the employee’s behavior who are satisfied with the
variety of payment in the firm and they are more productive and committed while low
performer prefers fixed pay. performance based pay can minimize employee turnover (Boxall
& Steenevaeld, 1999). (Thomas, 2012)

Types of incentives: An incentive is a reward offered to a person to encourage their actions in

the direction they wish. There are theoretically quite several rewards. A valuable distinction
can be made between the material and the non-material incentives. In addition, it may break
material (or tangible) incentives in monetary and non-monetary terms further down. So, three
types of rewards, then identified:
• Monetary rewards are those benefits that are measured in money terms. Monetary
incentives are financial benefits often used by employers to encourage workers to
achieve their goals. Money, being a symbol of strength, status, and respect, plays a
major role in meeting a person's social-safety and physiological needs. For example:
Cash.
• Non-monetary tangible incentives are more motivating than monetary incentives. It is
the tangible benefit that we provide to the employees in various forms like, free lunch
or restaurant coupons for meals or holiday trips.
• Intangible incentives are the incentives that have no material or monetary value but that
can maintain a valued and inspired feeling for the employee. For example: employee"
recognition of the week, positive reviews of performance, and public praise from
executive. (Steven Condly, 2003)

Impact of incentives on organizational performance:

The financial and moral motivation relationship increase employee productivity in Riyadh,
Saudi Arabia's Department of Civil Defense. As per Al-Harthi (1999) he found promotion a
worthy way to increase employee motivation, improve the quality of employee performance,
followed by moral incentives. (Al-Nsour, 2011)

Human Resource possess a strategic part of organization that works in giving value added
output after all the investment organization made on them. So, it is fair to give them the
compensation what they deserve after delivering the productive output. Again, pay packages
inspire employees to give their best for the organization which help organization to achieve the
specific goals and objective. Incentives is the effective way to retain the productive employees.
(Arnold, 2013). (Cross, 2019)

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Every employee will give their best performance and dedication when they feel or trust that
the management will reward them for what they are offering or their efforts. Apart from that,
they also accepted that another aspect that can affect motivation is working conditions,
opportunities for training and growth, and job security. But the motivation that comes with
incentives is the most important and most powerful of all these factors that can influence
employee performance.

Incentives and benefits in wider range can enhance employee productivity and effort that match
with the expected output. Employee became more functional by the wide range of incentives
rather than individual incentives. (Gibbons, 1998; Holmstrom and Milgrom, 1994; Roberts,
2010). (Robinson, 2016)

Reward can lead to and draw greater interest from individuals who can fulfill the respect and
recognition needs of an employee. If the employer can improve employee morale by using
incentive as a motivator, it can affect the behavior of individuals and their abilities and
willingness to achieve important long-term objectives by Sandilyan, Mukherjee & Miltra
(2012). (Rashid Ahmed, 2018)

Basically, all companies use their employees to pay, bonus, promotion, or other forms of
incentives to promote a high level of performance. Many factors will change to reward the
employees, such as the performance of the employee, the employer relationship, and the
training and development opportunity. To ensure that employees are still motivated, a company
must design the incentive system carefully before determining employee performance and then
rewarding it. This is because the incentive is the stronger motivator for the employees, and it
is very important to reward employees who offer high-performance levels in future to sustain
their efficiency.

Some of the impacts of incentives are given below:

• Incentive programs with variance like money reward, intangible rewards enhance
employee engagement and enhance performance if incentive program is appropriately
designed. The more employee engagement, the more effective the organization is.
• Incentive programs engage participants: studies showed that incentive programs would
raise interest in work. Reward system influence HR towards targeted mission and 15%
improved output and 26% improved efficiency by reward schemes that enhance the
ability to think. (HAROLD STOLOVICH, 2010)
• Incentive programs attract quality employees: Organizations that deliver well organized
reward schemes may recruit and retain staff of higher quality than other organizations.
So, all these influence organization performance through employee performance. (Rashid
Ahmed, 2018)

Factors of external competitiveness:

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 • Demand and supply factors of Human resource play a role in the decision to make
payments. Employees with unique skill sets and abilities where organization wants to
invest on as sustainable competitive advantage and their demand is high in market with
higher pay and compensation than those with readily available ordinary skills on the
job market.
• Organization production, marginal earning, efficiency in operation with technology
also an effecting factor that vary among industry.
• Government by various statutory acts, such as the Minimum Wages Act, 1948, the
Payment of Salaries Act, 1936 & other Act dealing with Provident Funds, the Gratuity
Act, the companies Act, etc., has a bearing on the decisions on compensation.
Companies must also negotiate on salaries and wages in the light of applicable
legislation which is under government control.
• If a single corporation retains a higher level of pay than those in the market line, the
cost of its workers becomes greater, which can raise the end cost of the goods. This will
influence the Company’s competitiveness. On the other hand, if a company keeps its
pay level below the prevailing rates, it is not permitted to employ the skilled and
knowledgeable manpower.
• The compensation changes are based on consumer consuming which calculates the
average price change for necessities like basic needs. Employee turnaround more where
they found flexibility to bear their cost of living.
• Trade unions' collective bargaining power also affects pay levels.
• The arrival of multinational companies and large businesses has caused a major change
in corporate pay system across industries which is termed as Globalization. (Jules
Leichter, 2010)

Importance of providing external competitiveness-based pay package:

Recognizing of external competition in wages is important because it helps workers to get equal
pay in the market. An externally competitive pay package helps an organization to accomplish
the basic compensation objectives: concentrate, attract, retain, and inspire. If a company
recognizes that another firm is willing to pay a worker more for their services, the employer
will change the wage accordingly. The company would aim to match the wages provided by
other employers on the market as much as possible to attract and retain the best employees. If
the organization cannot provide the same benefits as its rivals, they can have non-financial
compensation for the employee. Companies cannot afford to lose their best workers in a
competitive market, because it will affect their profitability and production. For example, if a
company wants to employ a new worker, it must develop a recruiting and training budget. To
prevent these inconveniences, the organization tries to do its utmost to accommodate existing
workers Competition also lets new enterprises realize the cost of salaries on the market. As the
labor market changes, understanding the current competition is necessary to analyze how the
package still meets the basic compensation goals. So, it is important to provide externally
competitive pay package that includes salary, incentives, benefits.

Different terms of benefits:

Employee benefits are the Rewards that are offered to the workers for being more operative to
the achieve the objectives. The benefits to workers can be divided into three specific classes
(Strenitzerova, 2015).

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 1. Social benefits: pensions, health insurance, childcare etc. Pensions, Employers have
pension plans for a variety of purposes, organizations' aim is to develop compensation
programs in line with their human resources policies. The two major types of qualified
pension plans offered by employers are Defined Benefit plans and Defined Contribution
plans. DB plans are formula-driven pension programs where employers usually agree
to pay workers a payout driven on their retirement age, final average salary and years
of service. DC plans are like insurance plans which offer an annual contribution-based
incentive as a percentage of the pay received on behalf of the employee and accrued on
the employee's account savings. Next health insurance, although providing one of the
most costly and important employer-sponsored benefits, this policy secured employees
life which is motivated factor. Lastly, work-family benefits: Work life benefits are a
type of accommodation and enhancement benefits; that help employees to balance his
work and family wellbeing. (Martocchio, 2003, p. 340). (James H. Dulebhon, 2009)
2. Benefit of nature of work: food, discount to employees for company products etc.
3. Benefit related to company position: manager cars, apartment, clothing etc. (Natasalia
Stalmasekova, 2017)

Now a days we can see another form of benefit is flexible benefit plan, as the situation of the
market is changeable. In which employees can chose to add the benefit payment to the pension
plan, health care plan or other benefits, such as disability or long-term care insurance.
Employees may also take the amount in cash, but they must pay the relevant taxes on the
amount.

Importance of providing benefits:

Employee benefits are valuable for job retention and stabilization. If the business provides
tailor-made benefits it becomes more appealing to current and future employees. Employers
might benefit from providing health insurance. It can help to hire and retain high-quality staff.
Employees who seek health insurance may have other characteristics that employers’ value;
they may be forward-looking or less flexible. Thus, the company will draw workers who expect
maintaining a long-term employment relationship by providing health insurance. Benefits
make workers happier and more productive. So, the major importance of providing benefits
are given below:

• Increased loyalty: Your workers are more likely to be loyal to your company when you
give employee benefits and when workers are more loyal, they are more likely to
continue to work for you.
• Increased focus and productivity: You should provide incentives to help workers to
reduce their tension. If workers are willing to take care of problems outside the
workplace, they can be more involved at work.
• Improve talent attraction: By delivering incentives you are improving your ability to
recruit applicants and employ new workers.
• Increased attendance: Your workers would be more likely to come to work if they have
health or others benefits. (O'Brien, 2003)

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3. Analysis

3.1 Summery of case

3.1.1. Case 1

Competition today is higher than they were before, so every organization needs to consider
external competition and different pay ranges before setting compensation pay policy for
employees. Employee a human capital for an organization that are more difficult to retain and
motivate when there is lots of competition in the market. SK superior a highly operative sector
part of retail industry was using job-based pay policy line internally where they were
remunerating their employees based on their job tenure and participation in the job. But
recently they are facing change externally in the retail industry by the increasing amount of
competition. The competitors are such as Burlington Stores, Kohl's, Macy's, and others. To
face this competitive situation top management decision is to be more flexible that will help
SK superior in rapid finer modification. Their new developed pay policy was mainly
concentrated on market value, pay survey data that align both internal and external competitive
criteria that accurately justified with job duties. They applied broad banding approach which
named as Career Bands where they added different grouped jobs and duties with little grade
and expended pay ranges, which signify that they would serve variety of pay policy reward
with broaden market pricing data for benchmark jobs. Career banding approach help SK
superior to identify career paths or advancement and different pay ranges for different job. By
following this approach, it was worthy to compensate employees by linking their performance
and focus on employee’s career growth. Broad banding process help SK Superior to align
business objective and strategies with greater performance. To accomplish the career banding
approach, they also implemented managerial training that will enhance performance goals with
effective reimbursement. As competition is broader then the variety in job, duties, and payment
is also broader so that is why the broad banding system helped to acknowledge all the jobs,
compensating performance factors, and market pay line data in a particular bands all at once
that enhance flexibility.

3.1.2. Case 2

The compensation plan of Western Food does not align with the performance of their
employees. Though their strategy is to give high quality services to their guests to make them
satisfied and increase their profit, their compensation strategy is not performance based. For
good performance, employees get a merit rise but it is as well for the poor performers. Their
salaries are not even market driven. They do not even get bonuses or incentives for certain
work-related behaviors and for their good performance. To make their competitive strategy
work, their HR manager Tina need to take some initiatives about incentive-based reward for
their employees as this is the biggest tool to make their performance linked with their
organization’s goal. After analyzing the problem, they have found out that, there is no
performance-based reward system for individual performance and the merit increase is for all
the employees. The reward difference between low performer and high performer is very low.
So, the CFO and HR manager decided to change their pay plan and to design a new pay strategy
for Western Food’s employees. Tina knows that in top organizations the incentive difference
between high performer and low performer is higher. Now they will design the new pay

12
strategy for every employees of their organization. They have decided to increase the merit
pay, based on the employee’s performance, the difference on incentive between low and high
performer will be 10% and according to the behavior and capabilities there will be specific
bonuses for the specific employees. The employees who score below 10%of their performance
will not get any merit pay. They have also set the recognition award that the employees can
choose themselves. These incentives are all based on how their hotel will achieve their goal on
satisfying their clients and making profitable revenues.

3.1.3. Case 3

Employees are dissatisfied with KYO Japan’s benefits package because it was not competitive.
When employees know that their organizations pay package was not competitive then they feel
demotivated. Survey said that employee’s satisfaction level becoming low day by day. Now in
that moment top management want to give total rewards as well as “Wow factors” to satisfy
their employees. They hired benefit consultant and develop steering committee to make a
competitive benefit package. So, they collect information to their competitors. The
organization gave all possible efforts to make this competitive benefit package to satisfy their
employees.
finally, after two years they come back with lots of competitive benefits like insurance, dental
and medical insurance, they provide different rewards and getting those benefits employees of
KYO Japan’s feel very happy.

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3.2. Analysis:

3.2.1. Case 1: Alterations in compensation at SK Superior

Answer:1
SK Superior used to follow traditional and the method of compensation where compensation
was based on the length of the service. This process made SK Superior less competitive in the
industry and made a weak position. To get the strong position in the industry, SK Superior
make a new approach which is more dynamic than previous one. This new approach is based
on broad banding approach where pay structure is divided under several pay grades. This
approach has created impacts on SK Superior like-

Flexibility in controlling overall job grades instead of individuals. Here managers may
supervise according to grades and provide guidelines. Here managers get the freedom to
manage works and pay systems according to grades. Moreover, employees also get flexibility
benefit from broad banding. They can move among grades inside the bands and increase their
skills. Employees also get promoted if they acquire knowledge and skills which is beneficial
for the company. This will increase their base pay and benefits as well.

As employees are getting the chance to work in different grades, this will increase cross
functional experience. This experience will affect their current performance and will be helpful
for their career growth. Employees work performance will increase incentives or bonuses
which will make them motivated and overall increase company performance.

Answer: 2
As a compensation manager I would like to prefer grades and ranges process to design
competitive pay package except Broad banding for SK superior. As SK superior were facing
competition in the market, so they need to be more adaptable and faster to observe the market
pay data and analysis the data properly. To do the analysis grade and range approach will help
them to identify more wider range of pay data and will add more value to the work by
evaluating variety of pay mix with different types of quality.

• Here first step is that they need to adjust same pay rate different jobs within a group
that will consider a grade. The criteria of the jobs need to be similar within one grade.
Each grade will possess its own similar pay range according to market pay line. So once
SK Set a pay range for a single grade jobs, and if the employee of this grade move
from one job to another job they will be paid the same range of pay within one grade.

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 Grade 1 Grade 2
Job k Job s
Pay=20000 Pay=35000
Job y Job d
Pay=20000 Pay=35000
Job g Job c
Pay=20000 Pay=35000

Figure 1: Grading of Jobs

• Second Step is that after grading they need to set the grades which consist of data of
the different jobs in the horizontal axis and then set the ranges of salary for the
particular grade thar consist of different jobs with similar criteria and salary. Pay ranges
are midpoint, minimum, maximum. (Compensation, 2011)

Illustration of ranging:
Market Line

Figure 2: Range of grade jobs

Trough grades and ranges they can easily detect different qualities like expertise, potentialities,
qualifications for different jobs in the market, they can also detect the value of the employees
that they are producing according to their skills whether they are matching, leading or lagging
in the market line or not. Furthermore, then can identify different pay mix with range of their
competitors like Burlington Stores, Kohl's, Macy's, and others. As pay is related to the value
of the work so again, ranges help to concede every employee accomplishment trough
diversifying pay range of pay, for the result they can retain their trained human capital by
meeting their presumption make them more career oriented.

Answer: 3

Yes, it was necessary for the SK Superior shift to a more performance-oriented compensation
system to be aligned to market pricing.
SK Superior used to follow traditional HR policy which caused poor image in the industry. It
was hard for them to survive in the competitive industry. They followed the promotion policy
which was based on the length of the service was not motivational for all employees and that’s
why the company’s productivity was low.

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For increase employee’s performance and being competitive in the market, they started
following performance-oriented compensation system. In this pay system, employees get
compensation as per their performance. This will make them motivated. If employees do not
get compensation as per their performance, there might be high rate of employee turnover for
dissatisfaction. They might move to another company where they get compensation as per
performance. This way, SK Superior may lose their talented and productive employees.
Performance-oriented pay system will reduce turnover rate.

They can follow lead pay system; lag pay system or match pay. In lead pay system they can
offer high pay package than competitors to attract the high qualified employees and the existing
employees will be satisfied. The job will be more attractive. There will be less training needed
for employees as potential employees will be selected. There will be less absenteeism which
will increase employees’ productivity. They may also follow lag pay where they will offer less
payment than the competitors. But they may include other offers like stock option or medical
benefit. These will make employees more committed to the company. They can also follow
match pay where they will offer as per the market rate. In this policy they may offer several
opportunities to employees to make the job more attractive than other companies.
By following these pay policies, SK Superior can make a competitive place in the industry.

3.2.2. Case 2: Improved Pay for Performance Plan

Answer: 1

Creating a list and describing the measurable criteria that Tina and the CFO set for their new
incentive plan:

The compensation plan for the employees of the Western Food was not performance based.
They are not getting any specific reward for their required behavior or performance. That’s
why the CFO and the HR manager Tina has set some measurable criterias to set their new
incentive plan. The measurabl criterias are-

Almost all the employees will get merit

increase based on their performance

10% incentives pay difference between

high and low performing employees

Specific bonus for required behavior

of the employees for each job.

Figure 3: Measurable criteria of setting incentive plan

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The first criteria they have set are that there will be performance-based pay for almost every
employee. Based on their performance they will get incentives. The employees who will score
10% lower of their performance will not get any merit pay.

According to the second criteria, there will be 10% difference in the incentives between the
high preforming employees and the low performing employees. The employees who will work
hard and do well in their work will get 10% more incentives than the employees who are not
working well.

If the employee’s behavior is according to the expectation and they are doing based on their
capabilities, they will be rewarded. For every job category there will be bonuses for the
employees who work according to their capabilities. They have also set a recognition award on
where the employees can choose their reward for high performance.

Answer: 2

Figure 4: Specific Behaviors of criteria position

For these certain behaviors of the positions mentioned in above flow chart, I have designed
some incentive programs. For front desk employees, how they are hendling the guests and these
behavior, they can get flexible work hours, short term bonuses and shared chioice of their
measured incentives. Managers will also get shared choice based on their performance level.
There will be recognition on how they are handling problems, non cash bonuses, discount on
the hotel’s restaurant for their family and can also get promotion.

Valets and house keepers will also get short term bonuses based on how many guests or rooms
they are handling, how they are communicating and handling the complicated clients. Based

17
on the standard number of clients they will get bonuses. They will also get medical insurance
and gift packages.

Answer 3

As a compensation manager of Western Food, I think providing incentive to employees is

necessary. It is necessary not only to improve individual’s performance but also for the
performance of the overall organization.

• Getting incentive for good performance will inspire the employees to do better. As a
result, it will increase the quality of performance.
• It will increase the job enjoyment and employee satisfaction toward the organization.
• Incentives and bonuses will motivate the employees and the turnover rate will decrease.
• It will attract qualified employees and to retain them for a long time.
• Employees will be loyal and dedicated toward their job; and it will reduce absenteeism.
• These will reduce the overall cost and will bring profit to the organization.
• As the performance of the individual employees will raise, eventually the overall
performance, goodwill and profitability of the organization will rise as well.

3.2.3. Case 3: Intended Benefits at KYO Japan

Answer 1:
It is very important to set a competitive base pay, benefits, and other incentives for an
organization. So, KYO must have the competitive benefit package to provide its employee
otherwise they feel demotivated. We see that in the first time when employee feel that KYO
did not provide them competitive benefits, in that time they became dissatisfied and it is very
natural.
• If KYO do not provide competitive benefits, then employee do not give their full
effort in the workplace.
• Maximum employees feel demotivated and try to switch the job where they get
more benefit than KYO.
• Turnover rate become high when employee feel dissatisfied about their benefit pay
package.
• Production can be low if employee feel that organization cannot provide them
proper benefits.

In Japan maximum organization they take care about employees for their standard of living.
They always try to provide more if the employee effectively performs for the organization. In
Japan maximum organization provide some benefits to their employees. They are:
• Paid Leave: Paid vacation is a popular benefit in maximum organization in Japan.
Employees get 10 or more days’ vacation. So KYO’s employee also want this type of
benefits.

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 • Overtime Pay: If an employee works over 40 hours a week then the company is
expected to pay for overtime to the employee unless they work in Management position.
So, in KYO provide this type overtime benefits to their employees they try to earn more
profit by working in overtime. That is why they do not switch their company.
• Maternity Leave: Guaranteed maternity leave in Japan covers a span of 6 weeks to 8
weeks after giving birth prior to the planned birth date.
• Child Care Leave: Childcare leave extends to both women and men. Childcare leave
begins the day after the maternity leave ends before the child reaches age 1.
• Annual Physical Checkup Benefits: In Japan maximum organization provide free
annual health care benefits to their employees. It gives health safety to their employees.
(Japan Payroll and Banefit, 2016)
KYO must need to provide a competitive benefit to its employees.

Answer 2:
Yes, I think KYO was enough capable to maintain the top leadership in managing the benefits
redesign effort well. Organization’s top leadership tried to solve this problem by using a
strategic approach guided by employee feedback, leadership direction and innovation.

Top leadership also wanted the new plan to be suitable with the organizational approach to
total reward and “wow factors” to satisfy their employees. Organization started strategic
planning process by comparing current benefit package to their competitors. They hired a
consultant to redesign the benefits package. A steering committee included of top managers
was developed to investigate the proposed changes. The organization focus on designing a
competitive benefit pay package and they also ensure that the benefit package met the needs of
every employee.

After two years we can see that KYO Japan become successful because recent survey result
shows that employees prefer the new benefit package and they became very happy. That means
they did it properly. They redesigned their benefit package in such way that fulfill employees
needs and competitive also. That is why I think that the organization was enough capable to
maintain the top leadership in managing the benefits redesign effort well.

Answer 3:
KYO successfully developed a new benefits package that delighted employees. They were
given dental, medical, disability and life insurance benefits. In addition, individuals are given
a set amount of flex dollars, but more can be earned based on pay, different lifestyle incentives
and tax-free bonus incentives.
As a consultant of KYO, I suggest some other benefits that KYO must offer to its employee to
keep them satisfied.

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 • Transportation Benefit: It is very much effective for both employees and organization.
Because if organization provide transportation for their employees it reduces employees
cost and employee come to the office on time that is benefited by organization too.
• Child-care benefit: It is very important for an organization to provide child-care benefits
for their female employees. Female employees sometimes cannot give their proper
attention in their work because they feel tensed about their baby. If organization give
this benefit to them, they feel that their babies are safe.
• Canteen Facilities: KYO can provide canteen benefit to their employees with low cost
and focus on hygiene factors. It helps to keep their employee’s health fit.
• Retirement Benefit: Most of the organization provide retirement benefits to the
employees. Employees feel secure to get this benefit. Some organization pay gratuity.
Both retirement benefit and gratuity attract people to get the job.
• Accident Insurance: In case of one or more body parts are lost due to accident, in that
time organization provide them lump sum cash.

So, as a consultant of KYO, I think that if organization provide those benefits, it keeps their
employees satisfied.

Retirement
Benefits.

Child-
Care Transportation Accident
Benefits Benefits Insurance

Canteen
Facilities.

Figure 5: Different types of Benefits

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4. Findings

Case 1:
• To be more vigorous, SK Superior moved from tradition HR policy to performance-
based compensation policy.
• Recognized job dimensions with pay analytical data that creates new development
process “Career Banding”.
• Provide diversifying proficiency through broad banding that make employees more
modifiable.
• Align Employees can broaden performance with overall company’s productivity.
• Employees are satisfied with the working environment and getting better
communication and briefing .
• Becoming more competitive in the industry by following different performance-based
pay policies like lead pay, lag pay or match pay.

Case 2:
• For required performance of the employees and make them dedicated to the work giving
incentives as per performance is mandatory.
• For certain behavioral aspects, the incentives should vary.
• The employees who are performing better should get higher bonus and incentives then
the others.
• Giving proper recognition, cash and non-cash incentives will not only improve the
productivity of the employees but it will also lead to the organization’s success.

Case 3:

• Competitive benefit package makes employees stimulated. They feel motivated.

• To retaining top-level employees’ organization must provide higher benefit package.
• Organization hired consulted for making a standard competitive compensation package.
• Without competitive benefit package employee cannot be inspired.

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5. Conclusion and Recommendation

5.1. Conclusion

In this term paper we focus on compensation management relevant different issues. It can be
base pay, incentives, or benefits. We try to find out the importance of competitive pay package.
We are describing three different cases and analyses every case nicely. How different
compensation pay package impacts on employee’s behaviors and organization, we also focus
it. We show different charts, diagrams to make everything clearer to you. This term paper helps
us to making different compensation decisions in different situations. It increases our practical
knowledge about different competitive compensation pay package like base pay, incentives,
and benefits.

5.2. Recommendation

Case 1:
• Give overall employee training with managers proper training so that they can supervise
the broad banding policy effectively.
• The pricing of different groups within the bands should be market oriented.
• Need to fix the pay range so that it does not exit least or top pay level within bands.
• To maintain budget, they should analyze the pay increment and control over movement
of employee within bands and give more assignments to evaluate.

Case 2:
• Proper appreciation based on performance rating, recognition and promotion should
be given according to the capabilities and work performed.
• More short term and non-cash benefits should be given.
• Proper training and learning opportunities should be given.
• Medical allowance and job security should be provided to all the employees.
• Pay should increase according to the cost of living for all employees.

Case 3:

Trough KYO Japan redesigned benefit package and make it Competitive. I would like to add
some recommendations.

• To control discrimination, it is necessary that the benefit program should well defined
and equitable for every employee.
• I also think that KYO Japan must evaluate project-based individual or group working
performance and should add some other benefits to reduce the employees’ cost, or
cafeteria approach to make employees more prompt.
• They must pay some extra benefits program like stock option to retain their top-level
employees.

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Appendix

Figure 1: Grading of Jobs...................................................................................................................... 15

Figure 2: Range of grade jobs ............................................................................................................... 15
Figure 3: Measurable criteria of setting incentive plan ......................................................................... 16
Figure 4: Specific Behaviors of criteria position .................................................................................. 17
Figure 5: Different types of Benefits .................................................................................................... 20

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