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Case study

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Abdirahman Mohamoud Ali

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School of Business and social science
Course code

BHS3073

Course name

Compensation Management

Case studies analysis

Prepared for

Dr, Kamalesh D/O Ravesangar

Prepared by

Abdirahman Mohamoud Ali askar

Student ID

AIU19092021
 Introduction

One of Halifax’s smaller printing companies is called The Henderson Printing. All
kinds of records are produced and sold by this company. A primary focus for CEO George
and his team is providing the finest possible service to their clients.

However, the company has a lot of management issues. The absence of a good organisational
structure is one of these issues. Management, accounting, and supervision are all lacking in
the company. The CEO is responsible for addressing the company's management challenges.
Henderson Printing's reward approach is hazy and workers get a variety of incentives.
Despite the fact that all employees get a Christmas Eve bonus, the amount varies greatly.
Some workers who are recognised by George for their pleasant demeanour get a higher bonus
than those who gripe about other employees or other reasons. Not all employees would be
happy with this (Demerouti, 2014).

The case is very interesting and is based on compensation problem with a medium
sized organization. We need to devise total reward strategy and evaluate various positions. I
hope you know what does total rewards refer to. If not, let me tell you, organizations use a
combination of monetary and non-monetary rewards so that employees are satisfied and
retained. It is to be kept in mind that higher the position, more the employees want non-
monetary rewards along with monetary.

It is also interesting that George is actually caring for employees and it has saved him from
unionization (which may sometimes cause problems for the employers too). But the problem
is, evaluation is done by George solely and is subjective in nature which means his own
judgement based rewards does not comply with equity theory.

Also, George is following customized solutions for its customers and focus is on quality
thereby, his strategy is referring to "differentiation" as per porter's generic strategies. This is
important to understand because strategy also defines what kind of rewards will be provided
to employees in order to align it with business strategy.

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When a firm lacks a structure and transparency around how pay decisions are made, it may
leave the organisation at a disadvantage for recruiting and keeping talent, preserving
employee pay parity, and directing its people investments in the proper locations. Here are
the tips that explain why compensation strategy is important:

 Budgeting and forecasting

Having documented compensation strategy helps you forecast the expenses of employing
additional staff and increasing salaries. It also prevents pay choices from being inconsistently
implemented. While it may be tempting to pay a candidate beyond the set compensation
range, it may quickly lead to a chain reaction of pay modifications to address employee
unhappiness and internal pay parity (Liqiang Chen, 2018).

 Recruiting new staff

There is a wide range of interests among strong candidates, and not all are seeking for the
same things. As a result, defining your company's Employee Value Proposition is a worthy
endeavour. To put it another way, take the time to figure out why people want to work for
your firm and why they want to remain with it. As a result, the best applicants are those who
are both competent and respect the compensation and ‘soft benefits' that the company
provides to its staff members.

 Keeping and Retaining top talent

Employees may get disengaged and look for work elsewhere if they perceive they are
being paid less than their colleagues. Internal equity is more essential than external equity
when it comes to maintaining personnel, but both are critical when it comes to recruiting new
employees. During periods like salary raises, job transfers, minimum wage changes, and new
recruits, it's a good idea to ensure that your best talent isn't leaving because of bad pay
practises (Jean & Robert, 2017).

 Fair pay practices

Despite the fact that it may happen accidentally, it is possible for wages to be unbalanced.
Keeping to established compensation systems ensures that workers who do comparable work
are compensated fairly. It is important to do an equal pay analysis and use pay policies that

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contribute to continued pay equality in order to prevent the expensive repercussions of
disengaged workers, discrimination claims, and legal action. In order to establish
compensation and determine salary improvements, you need to have a clear understanding of
your compensation strategy. It also reduces the uncertainty and irritation that comes with
making compensation choices based on subjective and unsubstantiated information (Al-
Nasser, 2016).

Formulate FOUR(4) compensation strategies for Henderson Printing.

Define the required behaviour

Management strategy may be used to develop an effective compensation plan. High

membership, suitable task, and some civic behaviour are necessary for the Human
Relationships organisation. Higher task behaviour is needed by remote sales workers who
have less supervision. Increased recruitment and retention of production employees will be a
primary aim of membership behaviour. Improved efficiency, faster production times, and
increased sales volumes may be achieved via the use of generated task behaviour. Clear
communication and greater collaboration, as well as frequent performance evaluations will be
ensured through citizenship behaviour.

Define the role of compensation

In order to stabilise the company's financial condition, retain workers, raise morale and pay
equality, and improve communication, the new compensation plan will play a key role. After
implementing the new compensation scheme, profits should rise by 5% the first year and by
15% the second year.

At Henderson Printing, a shared aim of producing the best quality printing materials might be
employed as an intrinsic motivation for staff. Increased motivation and decreased turnover
may be achieved via the development of technical ladders and seniority levels after the
introduction of an assessment system.

On the other hand, the chance to learn on the job from experienced personnel and to build
training and supervisory skills for those who will teach will be intrinsically rewarding for

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production workers. As a result, sales people will be more motivated if they are given some
initial training. On top of that, the organisation may save money by recruiting people who can
learn new abilities and then be trained by more experienced staff rather than hiring
experienced employees. For production line workers, there are no intrinsic or extrinsic
rewards to encourage them other than remuneration and the intrinsic motivators listed above.
No additional remuneration above the minimum necessary to attract a significant number of
candidates is required since turnover costs are modest. No task-related behaviour will be
influenced by the compensation scheme. This will be handled by the supervisor and the
technology directly (Long R. /., 2018).

The remuneration structure, on the other hand, is a great way to motivate salespeople to do
their best work. Performance compensation, in particular, is a great way to motivate remote
workers to complete their assigned tasks. Organizational restructuring, the manufacture of
high-quality printing materials, and training new employees are all intrinsic motivations for
managers. To succeed in a reorganisation, the firm must recruit excellent management at this
critical time. When it comes to attracting and retaining top leaders, the remuneration structure
will play an important role in this regard (Long, 2014).

Determine the compensation mix and level

Henderson Printing should use a mixed compensation plan. Various remuneration strategies
will be used depending on the level of employees stated above, as well as for the different
levels of sales representatives, who operate remotely with limited supervisory oversight and
demand more task-oriented behaviour.

Compensation and incentive are used to entice, retain and encourage staff members. A
company's pay plan is a reflection of its work culture and its ultimate goal. Designing
compensation plan and the complexity of compensation strategy may be aided by the use of
the philosophy. Developing a compensation plan refers to the financial parameters that form
the foundation of the entire compensation approach. It is the whole remuneration package
that workers get that creates a bond between the firm and its employees.

Keeping up with today's competitive climate requires a combination of pay, perks, incentives
and non-cash remuneration, according to Demerouti et al. (2014). More than any other policy
of pay, the compensation mix attracts, motivates, and retains workers (Demerouti, Burnout
and job performance: The moderating role of selection, optimization, and compensation
strategies., 2014).

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Salary is the most common form of remunerating workers, and it is closely tied to the
position held and the expertise possessed by the individual. Since wages are so prevalent,
they are often consistent in market structure. Employees are primarily differentiated by the
advantages they get from their employer.

Stability, health, wellbeing, and lifestyle are all linked to it. It is common for incentives to be
tied to corporate objectives and employee success. There are two sorts of incentives: short-
term and long-term. The short-term incentives include yearly bonuses, profit sharing, and
commission plans, whereas the long-term incentives are mostly stock options.

Compensation mix, according to O'Connell & O'Sullivan (2014), includes base pay, indirect
pay, and incentives. It is essential to establish a compensation mix policy that is based on a
formula that will guide the rest of the plan. The formula takes into account the percentage of
compensation for each of the many compensation categories, which is then multiplied to
obtain the overall compensation (O’Connell, 2014).

Henderson printing's formula might be 70 percent base pay, 20 percent indirect

compensation, and 10 percent performance pay. The pay mix formula is based on the
company's needs, the market's circumstances, and the company's goals.

If they don't obtain their desired salary, the majority of workers will not work in any
institutions at all. The wage level of each employee should be in accordance with the market
rate, and this might make up 70% of the compensation mix.

If they don't obtain their desired salary, the majority of workers will not work in any
institutions at all. The wage level of each employee should be in accordance with the market
rate, and this might make up 70% of the compensation mix.

Marketing price, job appraisal, and remuneration for expertise all influence the pay range. To
inspire and retain workers, a 20 percent indirect pay weightage is associated with additional
incentives and requirements. Despite this, Henderson is unable to provide further perks, but
they must begin doing so in order to inspire its staff.

Employees must be paid for exceptional performance, as well as inventive thinking and
passion and commitment to their work. This should be given 10% weight. Compensation mix
may be summarised in the following manner (McLarney, 2016).

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Elements of Weights Types Importance
compensation mix
Base pay 70% Basic of the salary There are several
elements that
determine a person's
salary, including his
or her level of
expertise and his or
her position in the
company. As a
result, basic pay
should take
precedence.
Indirect pay 20% benefits such as All of these aspects
retirement, health enhance the perks of
and life insurance, a the work. More
corporate vehicle, skilled employees
cell phone and are attracted to these
internet access, and positions.
yearly leave are all
included in the
benefits package.
Performance pay 10% Promotions, The payments are
bonuses, and other vital to inspire
rewards may be people for hard work
given to those who and ideas about
perform well. innovations. These
sorts of
remuneration
enhance the morale
of workers and they
become motivated to
work hard.

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Types of reward system can be implemented by Henderson Printing

The employees will be more motivated by non-monetary incentives. These kinds of

awards may help the employees feel more confident and fulfilled in their job, which in turn
increases their productivity and encourages them to do their best. A non-financial award may
have the same effect on your workers as a money reward by making them feel appreciated
and valued. Here are the four non-monetary benefits that can be implemented by Henderson
Printing:

1- Recognition

Motivation in the workplace may be boosted through recognizing and rewarding employees.
When an employee feels valued, they tend to work more. As a result, employees who believe
they have a significant impact on the organisation they work for are more inclined to stick
around. An employee of the month programme, gift cards to high-end restaurants, or a pat on
the back may all be easy ways to show your appreciation to your staff.

2- Contribution

One of the best ways to inspire the employees is to show them how much the company
appreciate their contributions. As a result, a large number of workers quit because they
believe that their efforts are not being recognised or acknowledged. To show your workers
how much you value their efforts, give them the opportunity to lead initiatives or ask for their
input on important choices.

3- Autonomy

Employees are grateful for the freedom to make their own decisions. They'd want to know
exactly what their responsibilities are and how much time they have to execute them. When
the workers know exactly what they are responsible for and what they need to do, they are
more likely to demand autonomy and discretion from their supervisors in the course of their
work. Assume the best of your team and place your faith in their ability to complete the task
at hand.

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4- Professional growth

Aspiring workers do not want a stagnated career path. Employees must be able to see
progress in order to stay motivated. In the absence of possibilities for advancement
and development, employees are more inclined to hunt for a new employer.

This demonstrates that you have faith in your workers' abilities if you provide them
with possibilities for advancement. Employees need to gain new skills and expand
their abilities.. Assigning them additional duties might help in this process. Training
your staff is another way to help them grow, as it gives them the confidence to take on
additional responsibilities. It may be as basic as appointing a senior mentor to help
people improve and enhance their careers (Zhu, 2016).

Conclusion

Despite the fact that Henderson Printing is worth $12 million, the company has a
plethora of management issues. George, the company's owner and CEO, aims to offer
long-lasting, high-quality record books.

As part of their company strategy, they place a high importance on listening to their
customers. However, Henderson Printing's management has a lot of issues. A lack of
organisational structure is the most serious issue. The company lacks appropriate
managers, supervisors, and accountants.

The CEO must personally investigate the inefficiencies in his or her own supervision.
The CEO, who is in charge of the firm, should not be engaged in the day-to-day
operations of the company, since this might have a negative impact on productivity.

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References
Al-Nasser, A. (2016). The Effective Compensation System in Organizations. Journal of
Business and Management, 85-88.

Jean, K. N., & Robert, T. K. (2017). Effect of Compensation Strategies on Employee

Performance: A Case Study of Mombasa Cement Limited. nternational Journal of
Innovative Social Sciences & Humanities Research, 25-42.

Liqiang Chen, J. W. (2018). Business Strategy, Compensation Policy and Innovation

Performance: A Behavioral Perspective. SAGE Journals , 16-22.

Long, R. J. (2014). Strategic compensation in Canada. Toronto, Ontario:: Nelson.

Long, R. /. (2018). Strategic compensation in Canada. Toronto: Nelson.

Demerouti, E. B. (2014). Burnout and job performance: The moderating role of selection,
optimization, and compensation strategies. ournal of occupational health psychology,,
19-96.

Demerouti, E. B. (2014). The moderating role of selection, optimization, and compensation

strategies. Journal of occupational health psychology, 91.

Demerouti, E. B. (2014). Burnout and job performance: The moderating role of selection,
optimization, and compensation strategies. Journal of occupational health
psychology, 91.

O’Connell, V. &. (2014). The influence of lead indicator strength on the use of nonfinancial
measures in performance management: Evidence from CEO compensation schemes. .
Strategic Management Journal, 826-844.

McLarney, C. &. (2016). Influences on Employee Reward Strategies in International

Organizations. International Institute of Social and Economic Sciences, 11-14.

Zhu, W. X. (2016). Analysis of car-following model with cascade compensation strategy.

Statistical Mechanics and Its Applications, 19-26.

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