compensation and benefits zenith medical system incorporated

Section C: Reward and Compensation Strategy. Next, develop your reward and compensation strategy by following the first four steps in Figure 6.1 (page 189 of the textbook). You need to define the type of employee behaviours that your client firm needs, define the role that compensation will play in producing those behaviours, determine the compensation mix, and determine the compensation level. If different behaviours are required from different job families, then you will need to repeat this process for each job family. The outcome of all this should be summarized for each job family in a compensation strategy template (shown on the following page). All jobs listed on the same compensation strategy template will have the same mix of compensation elements and the same compensation level relative to the market (i.e., lag the market by a certain percentage, lead the market by a certain percentage, or match the market). Note, however, that this does not mean that all jobs on the same template will receive the same dollar amount of pay; it just means they are all subject to the same compensation strategy. Figure 6.2 (page 224 of the textbook) provides an example of a filled-in compensation strategy template. You should carefully read the example that surrounds Figure 6.2. You will need at least two compensation strategy templates—one for those jobs you are putting under a pay-for-knowledge system (PKS) and at least one for the jobs you will be putting under a job evaluation (JE) system (you will not be putting any jobs under market pricing). In fact, it is 52 likely you will need three or four templates for your JE jobs. Every job listed in the “partial listing of job descriptions” at the end of your client description must appear on a compensation strategy template (except for any jobs you may eliminate by job redesign). For any new jobs that you create, you must prepare a job description, and that job must appear on a compensation strategy template. In creating job families, the first thing to decide is which jobs will be included under the pay-forknowledge system. (Material in Chapter 4 will be useful in making this decision.) The remaining jobs will fall under job evaluation, and you need to consider how many distinct groupings of behaviours (job families) you should have. (Incidentally, you do not need to include top management—the CEO and the two vice presidents—in a job family. Those three jobs will not be included in your compensation system.) Bear in mind that creating a high number of job families creates a very complex compensation structure but that too few job families may result in an inappropriate compensation strategy for some jobs. In this case, fewer than three JE job families is likely too few, while more than five JE job families is probably too many. To successfully complete this section, you will need to use the concepts found in Chapters 4, 5, and 6. The quality of this section (and the mark you receive for it) depends on how well you can demonstrate application of these concepts. Incidentally, don’t forget to include the behavioural objectives you are setting for the compensation system (see Table 6.2, page 195 of the textbook).

Family Job Title PFK/Evaluation Behaviour
1 Junior Applications Programmer – Financial Management Systems PFK C
1 Junior Applications Programmer – Materials Management Systems PFK C
1 Junior Applications Programmer – Medication Tracking Systems PFK C
1 Junior Applications Programmer – Records Systems PFK C
1 Junior Applications Programmer – Scheduling Systems PFK C
1 Intermediate Applications Programmer – Financial Management Systems PFK C
1 Intermediate Applications Programmer – Materials Management Systems PFK C
1 Intermediate Applications Programmer – Medication Tracking Systems PFK C
1 Intermediate Applications Programmer – Records Systems PFK C
1 Intermediate Applications Programmer – Scheduling Systems PFK C
1 Senior Applications Programmer – Financial Management Systems PFK C
1 Senior Applications Programmer – Materials Management Systems PFK C
1 Senior Applications Programmer – Medication Tracking Systems PFK C
1 Senior Applications Programmer – Records Systems PFK C
1 Senior Applications Programmer – Scheduling Systems PFK C
2 Accountant (Finance and Administration Department) EV T
2 Caretaker (Finance and Administration Department) EV T
2 Compensation Clerk (Human Resources Department) EV T
2 Compensation Officer (Human Resources Department) EV T
2 Secretary (all departments) EV T
2 Junior Systems Trainer (Systems Installation Department) EV T
3 Compensation Manager (Human Resources Department) EV M
3 Director of Human Resources (Human Resources Department) EV M
3 Director of Marketing (Marketing Department) EV M
3 Director of Systems Development (Systems Development Department) EV M
3 Manager of Financial Systems Development (Systems Development Department) EV M
3 Regional Marketing Manager (Marketing Department) EV M
4 Senior Systems Hardware Analyst (Installation Department) EV C
4 Senior Systems Installation Specialist (Installation Department) EV C
4 Systems Integration Specialist (Systems Development Department) EV C
4 Systems Marketing Specialist (Marketing Department) EV C
4 Systems Design Analyst (Marketing Department) EV C

The Fit Stop

Compensation Strategy Worksheet

1. Briefly identify the key contextual and structural considerations for this organization.

Contextual / Structural Considerations:

· Environment (Stable, Simple, and Complex)

· Business Strategy (Analyzer, Differentiator)

· Technology (People, Ideas) – specialized

· Size (Medium)

· Workforce (Moderate) – very educated

· Job Design (High-Involvement)

· Coordination and Departmentation (High-Involvement)

· Control (High-Involvement)

· Communication (High-Involvement)

· Decision Making and Leadership (High-Involvement)

· Reward Systems (High-Involvement)

 

2. Identify the most appropriate managerial strategy and briefly describe why you consider it to be the best choice for this organization.

o Classical      o Human Relations     o High Involvement

We have chosen High Involvement as the most appropriate managerial strategy. While some of the considerations fall under other strategies we feel our choice would be the best fit. The employees would be given a fair amount of autonomy once the initial training had commenced. They will need to be self motivated in order to learn enough information about the equipment to be able to sell/promote the products effectively. Susan wants highly knowledgeable/motivated workers, and employees with these characteristics would thrive in a situation where they are enabled to do so.

 

3. Identify the behavioural goals necessary for success for each type of employee.

Employee Type Behavioural Goals (membership, citizenship, task)
Manager 1. Membership Behaviour

2. Citizenship Behaviour

3. Task

Sales Staff 1. Task

2. Membership Behaviour

3. Citizenship Behaviour

Kinesiologist

Physiotherapist

1. Citizenship Behaviour

2. Membership Behaviour

3. Task

4. Define the role of compensation for each employee type

Employee Type Int. Ext.

(non)

Ext.

Comp.

Comments to support the role (H/M/L) of this type of compensation for this employee type
Manager H

M

L

H

M

L

H

M

L

For managers, intrinsic rewards would have a moderate role since they are required a certain amount of knowledge regarding training, fitness and equipment. Extrinsic rewards would have a low role because there is not much being offered to the managers besides equipment use. Compensation has a moderate role because of different benefits and packages that may be offered to managers in order to retain them.
Sales Staff H

M

L

H

M

L

H

M

L

For sales staff, intrinsic rewards would also have a moderate role as they will need to get an in depth understanding of different equipment and how to develop personalized training and conditioning programs to fit the customer’s needs. Extrinsic rewards may play a moderate role for sales staff with equipment use and potential classes to gain an expanded knowledge on rehabilitation methods and training/conditioning programs. Compensation has a low to moderate role with benefits/packages, discounts and possibility of commission for sales.
Kinesiology

Physiotherapist

H

M

L

H

M

L

H

M

L

For Kinesiology and Physiotherapist, intrinsic rewards would have a high role since these two individuals would have a passion for this field and want to help those who come in with injuries resulting from sport related activities. Extrinsic rewards would have a low role since there is not much to offer them working at the fit stop. Compensation may have a moderate role as it would be important to retain both the kinesiologist and physiotherapist as they do possess the most knowledge regarding fitness and injuries at fit stop and the potential loss of one of these employees would substantially affect the company

 

5. Identify the compensation mix that will best motivate the desired behaviours.

Employee Type Component % Justification
 

Managers

Base 70 Managers need a steady income to provide security and will demonstrate commitment on behalf of the employer to the employee.
Perform 15 Managers will be facilitating and encouraging group performance amongst the sales staff, this needs to be rewarded accordingly. They need to create a healthy work environment and ensure things run smoothly. Providing performance pay will reinforce this behavior in the long run.
Indirect 15 Indirect pay can help keep the managers in their position and feeling motivated to do a great job on behalf of the organization. Will provide a “peace of mind”.
 

Sales Staff

Base 60 The sales people still need a ‘safety net’ of pay. Providing an hourly wage will guarantee the employees have security if there is an unfortunate day for commission sales.
Perform 30 Providing higher performance pay will motivate key employee behaviours. The sales staff will be focused on selling unique sports equipment and services that are customized to the purchaser. Rewarding with commission will inspire each employee to reach higher sales targets.
Indirect 10 Will provide employees with motivation to sell company products as well as encouraging employees to want to stay.
Kinesiologist

&

Physiotherapist

Base 70 These employees have earned their degrees in their specialties and need a stable salary income to feel secure for their future.
Perform 15 These employees are working directly with customers and providing a personalized experience for each individual. As an employer you would want them to feel motivated to do an exceptional job and reward them for their behavior.
Indirect 15 The case states that other competitors in the same industry have provided poor services and that their employees do not obtain the preferred knowledge. We can therefore make the assumption that there is a labour shortage of sufficiently educated workers. By providing indirect compensation, the kinesiologists and physiotherapists will be satisfied and content with their job and less likely to be stolen by a competitor.

 

6.     Complete compensation strategy template for only one employee type (job family).

                                                        

Reward and Compensation Strategy

Compensation Strategy Template 

Jobs Covered: Administrators

Total Compensation Level: Match? Match OR Lead? OR Lag?

Compensation Component Projected Proportion

of Total Compensation

1. Base Pay 75%
a. Job Evaluation ✓%
b. Market Pricing %
c. Pay for Knowledge %
2. Performance Pay 10%
a. Individual Performance Pay %
i. Piece Rates %
ii. Commissions %
iii. Merit Bonuses %
iv. Special Incentives %
b. Group Performance Pay %
i. Gain Sharing %
ii. Goal Sharing %
iii. Other Group Pay %
c. Organization Performance Pay 0%
i. Profit Sharing %
ii. Stock Plan 100%
iii. Other Organization Pay %
3. Indirect Pay 15%
i. Mandatory Benefits ✓%
ii. Pension Plan ✓%
iii. Health & Life Insurance ✓%
iv. Paid Time Off ✓%
v. Employee Services %
vi. Other Benefits %

Compensation Strategy Template 

Jobs Covered: Directors and Managers

Total Compensation Level: Match? Match Lead? Lag?

Compensation Component Projected Proportion

of Total Compensation

1. Base Pay 65%
a. Job Evaluation ✓%
b. Market Pricing %
c. Pay for Knowledge %
2. Performance Pay 15%
a. Individual Performance Pay 90%
i. Piece Rates %
ii. Commissions %
iii. Merit Bonuses %
iv. Special Incentives ✓%
b. Group Performance Pay 0%
i. Gain Sharing %
ii. Goal Sharing %
iii. Other Group Pay %
c. Organization Performance Pay 10%
i. Profit Sharing ✓%
ii. Stock Plan %
iii. Other Organization Pay %
3. Indirect Pay 20%
i. Mandatory Benefits ✓%
ii. Pension Plan ✓%
iii. Health & Life Insurance ✓%
iv. Paid Time Off ✓%
v. Employee Services %
vi. Other Benefits %

Compensation Strategy Template 

Jobs Covered: Specialist/Analysts

Total Compensation Level: Match? Lead? 2% Lag?

Compensation Component Projected Proportion

of Total Compensation

1. Base Pay 50%
a. Job Evaluation ✓%
b. Market Pricing %
c. Pay for Knowledge %
2. Performance Pay 30%
a. Individual Performance Pay 80%
i. Piece Rates %
ii. Commissions ✓%
iii. Merit Bonuses %
iv. Special Incentives %
b. Group Performance Pay 0%
i. Gain Sharing %
ii. Goal Sharing %
iii. Other Group Pay %
c. Organization Performance Pay 20%
i. Profit Sharing ✓%
ii. Stock Plan %
iii. Other Organization Pay %
3. Indirect Pay 20%
i. Mandatory Benefits ✓%
ii. Pension Plan ✓%
iii. Health & Life Insurance ✓%
iv. Paid Time Off ✓%
v. Employee Services %
vi. Other Benefits %

 

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