Part 1 - Luxury Bag Company You are the compensation specialist at an organization making luxury bags that are particularly well received on the international market. Due to currency fluctuations, the profits this organization generates vary widely from year to year. Aiden Wong, who works for this organization, is in charge of a large product development group where the emphasis is on flexible performance, creativity, and "doing whatever it takes to get the job done." What kind of reward system would you recommend for this group of employees? In particular, should there be a large incentive component? Should rewards focus mostly on money, or should this organization work hard to incorporate the other 12 rewards. Part 2: Case Study: Compensation Strategy This case study is designed to simulate the development of a compensation strategy for ABC Company (as detailed below). Please choose one department (ie. Marketing) from ABC Company and then write example compensation strategy statements. Please ensure the five areas are included in your strategy - objectives, internal alignment, external competitiveness, employee contributions, and management. Company Introduction: ABC Company is a start-up company supplying small parts to local manufacturers in the assembly of automobiles and consists of approximately 350 employees of both unionize and non-unionize. The current operation works on one shift and there is ample room for expansion. An Organization Chart of the non-unionize employees can be found in Appendix 1. Their customers are automotive and smaller fabricators of recreational products. Their current customers are very aggressive with respect to the cost of their products and place significant pressure on the company to reduce the price of their products. As a result, profit margins are minimal. The company's mission statements are: Lead the market in quality and cost of products produced. € Comply with all employee-related laws and regulation. e Provide a transparent and open culture. € Provide opportunities for employees to contribute to the problem-solving process and thereby improve productivity. ABC Company operations started five (5) years ago with managers hiring non unionize individuals from their personal contacts. Each manager had a standard employment contract but was given authority to pay what it took to get the personnel they required. This has resulted in many employees performing similar functions, or who have similar levels of responsibility, receiving a wide variation in base pay. The Company has no formal compensation strategy or structure, and this has resulted a perception of unfairness among employees. Since start up there has been some increases to pay, but these increases have not necessarily kept up with inflation. The HR function to date has played mostly an administrative role in maintaining employee files and payroll. They were not typically involved in the process of setting compensation rates for new hires. Some employees have been overheard complaining about the fairness and frequency of merit increases. Recently, Original Equipment Manufacturers (OEM's) and various government agencies in the Health Care Industry has requested the Company to quote on the manufacturing of parts for Ventilators and PPE such as masks and shields. This will require that ABC Company expand its manufacturing operations and to diversify its current customer base by including non-automotive customers. These changes will likely require an additional shift of production. ABC Company is also considering expanding into the manufacture and assembly of furniture and residential or construction supplies. The expansion of another shift in its operations will require Collaborate the hiring of Managers and First Line supervisors for each of the manufacturing and maintenance processes.
Part 1 - Luxury Bag Company
You are the compensation specialist at an organization making luxury bags that are particularly well received on the international market. Due to currency fluctuations, the profits this organization generates vary widely from year to year. Aiden Wong, who works for this organization, is in charge of a large product development group where the emphasis is on flexible performance, creativity, and "doing whatever it takes to get the job done." What kind of reward system would you recommend for this group of employees? In particular, should there be a large incentive component? Should rewards focus mostly on money, or should this organization work hard to incorporate the other 12 rewards.
Part 2: Case Study: Compensation Strategy
This case study is designed to simulate the development of a compensation strategy for ABC Company (as detailed below). Please choose one department (ie.
Marketing) from ABC Company and then write example compensation strategy statements. Please ensure the five areas are included in your strategy - objectives, internal alignment, external competitiveness, employee contributions, and management.
Company Introduction:
ABC Company is a start-up company supplying small parts to local manufacturers in the assembly of automobiles and consists of approximately 350 employees of both unionize and non-unionize. The current operation works on one shift and there is ample room for expansion. An Organization Chart of the non-unionize employees can be found in Appendix 1. Their customers are automotive and smaller fabricators of recreational products. Their current customers are very aggressive with respect to the cost of their products and place significant pressure on the company to reduce the price of their products. As a result, profit margins are minimal. The company's mission statements are:
Lead the market in quality and cost of products produced.
€ Comply with all employee-related laws and regulation. e Provide a transparent and open culture.
€
Provide opportunities for employees to contribute to the problem-solving process and thereby improve productivity.
ABC Company operations started five (5) years ago with managers hiring non unionize individuals from their personal contacts. Each manager had a standard employment contract but was given authority to pay what it took to get the personnel they required. This has resulted in many employees performing similar functions, or who have similar levels of responsibility, receiving a wide variation in base pay. The Company has no formal compensation strategy or structure, and this has resulted a perception of unfairness among employees. Since start up there has been some increases to pay, but these increases have not necessarily kept up with inflation. The HR function to date has played mostly an administrative role in maintaining employee files and payroll. They were not typically involved in the process of setting compensation rates for new hires. Some employees have been overheard complaining about the fairness and frequency of merit increases.
Recently, Original Equipment Manufacturers (OEM's) and various government agencies in the Health Care Industry has requested the Company to quote on the manufacturing of parts for Ventilators and PPE such as masks and shields. This will require that ABC Company expand its manufacturing operations and to diversify its current customer base by including non-automotive customers. These changes will likely require an additional shift of production. ABC Company is also considering expanding into the manufacture and assembly of furniture and residential or construction supplies.
The expansion of another shift in its operations will require
Collaborate
the hiring of Managers and First Line supervisors for each of the manufacturing and maintenance processes.
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