Reference no: EM133158137
Compensation Management- Case and questions
Nicey's Baked Goods is the leader in baked goods on the island. It line of products include hard dough bread, rolls, buns and pastries. The company has always prided itself on supplying the best quality at an affordable cost consequently the profit margins are very slim. Compensation up to this point has been mostly based on seniority with incentive added for sales personnel to their base salary. There is a plan to hire 28 more sales representatives on the same compensation scheme. Each member of the sales team operates on their own.
Sales have been flat for the last two years and several managers are of the opinion that a larger portion of pay should be based on an incentive scheme. The thinking is that incentive scheme would help to increase sales and manage compensation cost. However, the management group is divided as to the best scheme to adopt. One manager has suggested a sales incentive scheme another has suggested a merit scheme. Someone else is of the opining that a team plan would work. Also, they want a company scheme that is simple to administer and that everyone can easily see the reward.
Questions
1.As the Administrative/ HR manager what factors would you use in determining an appropriate compensation mix for the company.
2.Develop a proposal for consideration by the Board and Top Management. Whether incentive pay should be more than traditional pay and the reasons for this recommendation.
3. Whether and why the reward plan should be team based or individual based.
4. The quantum of risk employees should be prepared to accept in their total package i.e. the ratio of incentive pay relative to total compensation, and an explanation for your choice.
5..The criteria by which performance will be judged and how this will be communicated and disseminated to supervisors for onward transmission to the general staff.
6. The administration of the reward system, i.e. whether short or long term and whether the payouts should match the production cycles which are also linked to the delivery schedules. Explain your choice.