Reference no: EM133298712

Dell : International Compensation Strategy

Dell Company is a renowned corporation that started its operations in the year 1984. The company was founded with a core mission to produce quality computers and electronic gadgets to satisfy consumer needs. Since its inception, the company has been recording exemplary performance. This is evident as depicted with its income base that stands at $102billion, its strong asset base, and profitability levels. Similarly, its effective management of employees has seen it improve on its productivity. The company was one of the institutions awarded for retaining and nurturing employees due to better terms of work. Notably, the company's exemplary capacity to manage the resources at its disposal including human capital has enabled it to remain very competitive in the electronic industry. It has a large market share that it has achieved due to the quality of its products. The exemplary performance that the company has been able to record over the years from its first year of business where it reported over $73million is attributable to a number of reasons. Firstly, the performance is attributable to its effective operating strategies that foster innovation and creativity. Secondly, the company's compensation strategy has been a critical pillar behind its good performance. The activity-based compensation strategy that it operates under, has ensured that employees are treated with immense decorum and that their welfare are taken care of properly. For instance, the strategy has enabled the management to pay employees well and subject them to fair terms of work. his has been raising their satisfactory levels that in turn lead to high performance. Thirdly, flexible organizational structure and effective communication channels has enabled the company to execute its activities properly. They have ensured that quality is not compromised through systematic awareness creation on stakeholder needs in terms of product features. They have also promoted communication between stakeholders especially investors whose input is vital for capital mobilization. The company has also been able to expand its market share since it provides quality computers that enable users to get up to speed solutions at their convenience. As noted, the company has a good compensation strategy that fosters fairness to stakeholders. The strategy that is referred to as activity-based compensation practice was adopted due to its ability in ensuring that remuneration of employees are adequate and are proportional to each employees work. The strategy is preferred in most settings since it provides well documented guidelines by which rewards are determined. Under the strategy, managers of the company are able to apply proper benchmarks that guide salary value or amount that each employee should get. he practice has seen the company rise to higher levels because it is able to retain highly proficient employees. For instance, best compensation practices have enabled the company to improve on its productivity levels for the reason that employees are willing to inject more effort. Despite the noble gains that employees have been able to attain including the company due to its best practices, the company is facing some challenges that it must address. The challenges include the risk of operating under financial deficits, the risk of reducing its future expansion programs and the risk of loosing money. These risks may make the company face many financial complications since high spending on wages is becoming detrimental especially in the current society. This may be a problem since the company spends a lot on wages as compared to its competitors. This happens because it pays good remuneration, bonuses, overtime dues and other allowances. Therefore, the management of the company must consider reviewing some of the company's policies to facilitate sustainability.

Source: Hitzeman, S. & Hammer, J. (2020). Marketing a Worker's Compensation Practice: A Low Budget, Shotgun Approach

Question: Based on the article above, Dell applies attractive and good compensation practices to both local and international employees to determine the positive or negative impact to the company and its stakeholders.

As to the statement above, discuss the relativeness of such practices applied by Dell at current and the applicability of those practices for future suitability of Dell in their compensation packages offered. Justify your answer with relevant examples to support.