Finding the right compensation is only the first step in the process and other benefits must also be considered. This report is was prepared to compare and contrast different compensation strategies and their implementation to the organization. The research findings that will be shown in this report are different compensation strategies available for adoption, other forms of compensation and benefits, and also implementation of these different compensations. Gain sharing, nonmonetary awards, and group based awards will be the three compensation strategies that the report will be focused on.

Three recommendations will be presented to the human resource director. The first will introduce nonmonetary awards followed by gain sharing. The second will also start with nonmonetary awards and then implementing group based rewards. Lastly, the third recommendation will introduce both gain sharing and group based rewards as a strategy. All three of these recommendations can be supplemented by adding benefits such as tuition reimbursement, flexible work schedules, or stock options. There are several other benefits that the organization can add while keeping cost down and decreasing employee turnover.

In conclusion, there are several compensation strategies and other benefits that can be applied, but the key is the implementation design required for their success. There must be collaboration by all parties of the organization and communication with all employees to ensure that the right strategy has been chosen. Introduction At the request of the human resource director, this report is being developed to present different compensation strategies available for adoption by the company. There are many compensation strategies that can be employed within any organization.

As a member of the human resource department, Juana Garcia, has researched and analyzed several of these compensations and narrowed it down to only three that are more aligned with the company’s business strategy and organizational structure. The three compensation strategies that will be presented are gain sharing, non-monetary rewards, and team based pay. Gain sharing is a compensation strategy developed for manufacturing over 80 years ago to help achieve an organization’s goal of financial gain. Gain sharing is often implemented when there are low profits and a declining business.

Nonmonetary awards can supplement a compensation strategy and also be used to reinforce specific business objectives. Team based pay is another great strategy that can be adopted to increase teamwork among employees and also increase productivity and quality. There are other forms of compensation that sometimes can be overlooked by managers and make a great impact to retaining key employees. Managers or supervisors have a wide range of tools to compensate employees without affecting the bottom line. A simple handwritten note or verbal recognition in front of an employee’s peers can mean more than an expected raise or bonus. While all of these compensation strategies sound great, they must properly be implemented in to the existing structure. Implementing the wrong strategy or rewarding bad behaviors can negatively set back a company. Even after a compensation strategy has been successfully been set in place, management must continue to monitor it and adjust it as needed to ensure its continued success. The compensation strategy must also align with the organizational structure and support the business strategy for it to be effective.

Research Findings Compensation Strategies Available In researching and analyzing several credible resources, Juana has found three compensation strategies that will be highlighted in the report. Compensation is much more than just a pay check and providing more of it without a goal is not effective. “Compensation helps indicate to organizational members how they are viewed by the organization—either positively or negatively. ” (Simms, 2007, Ch. 15) Improper implementation can lead to increased turnover and/or a less productivity.

Gain sharing combines goal orientation, teamwork, employee involvement, and improvement in quality in to a financial rewards system. Often times, gain sharing is compared to another strategy known as goal sharing, but they are not similar strategies. Goal sharing is more focused on achieving a business strategy and the payouts are annually when compared to gain sharing, the payouts are more frequent and are focused more on a financial formula. The most common form of gain sharing was developed by Joe Scanlon as it focuses more on the value of the individual.

Some of the benefits that can be expected when implementing gain sharing are improved communications, employee involvement, and long term identity with the company. A financial formula must be in place and also communicated with the employees to ensure success. Gain sharing is more focused on financial performance than it is with physical performance. Gain sharing formula’s usually employ one of these three cost measures: Cost as a percent of sales, cost per unit of output, and costs versus budget. The second compensation strategy researched is nonmonetary awards.

Nonmonetary awards are not intended to replace cash awards, but it can be used effectively if no cash awards are in place to ease the transition. There are several types of nonmonetary awards a company can give to an employee, such as symbolic awards, earned time off, or merchandise to name a few. Nonmonetary awards can be used to recognize outstanding performance and also create awareness amongst employees. The third compensation strategy, group-based rewards, can be implemented to encourage and reward teamwork. It can also be used to reward individuals on the basis on how well they work in groups or teams.

This strategy is very effective in directing team members to work toward common productivity or quality goals. Each individual must be held accountable for their own duties, so that social loafing is avoided. Johnsonville Foods, Inc. uses group-based rewards to make teamwork an important standard to determine merit increases. Associates rate each other’s contribution to team goals, communication effectiveness with other team members, willingness to work with other team members, and attendance and timeliness at team meetings.

A group based reward system should be applied only after the team has been formed and have worked together, so that rewards can be properly applied. Group based rewards can add to the total payroll costs if they are an addition to individual rewards or combined with another compensation strategy. Other cost can also come from developing teams and training. This issue can be solved by giving a group based award for meeting labor cost reductions or reducing the amount rewarded and setting up a separate account for future rewards.

In order for this strategy to succeed, the company must develop valid measures of the individual’s contribution to the team and implementing proper performance reviews by superiors and team members. Analysis: After analyzing all of the credible resources, Juana has found that all three of these compensation strategies can be implemented in to the organization. Gain sharing can be implemented to increase profits and add trust amongst employees. This strategy must be properly communicated with everyone, so that confusion may be avoided. Financial gain formulas are a great way of educating employees on why the rewards are given.

This type of compensation strategy has been around for many years and proven to be successful by many companies. Nonmonetary awards can reward and encourage employees to be good role models and set the bar for what the organization expects. The rewards can be inexpensive, but create a great impact in the organization and business strategy. It can also act as a bridge to introduce other forms of compensation strategies to the company. The third compensation strategy is group based awards and if implemented successfully can add increased teamwork within an organization.

Other Forms of Compensation/Benefits Financial awards are great to motivate employees and reward them for great performances; however it should also be combined with other forms of compensation to retain talented employees. An organization must also create a proper balance with work and family to avoid turnover. Some options to create a family-friendly environment are flexible work schedules, telecommuting, job sharing, and childcare facilities. “These savvy employers give talented employees flexibility in how they work, when they work, and often where they work.

They allow employees to meet personal responsibilities while still being productive at work. ” (Kaye & Jordan Evans, 2008) Other forms of compensation can also be tuition reimbursement, retirement benefits, life insurance, company vehicle, medical and dental benefits, and discounts on products or goods related to work. “Many employers reimburse educational expenses to encourage employees to expand their skills and knowledge. ” (Keller & Associates, 2009) Some employees look to move up in the organization and tuition reimbursement allows them to obtain those skills and grow internally. Another great compensation that can be given is company stock options. Giving employees the option to purchase a share of the company can create more loyalty and commitment to the organization. It allows them to share in the profits of the company and also holds employees more accountable for their performances. It is a great benefit that can be added to an employee’s retirement or pension package. Analysis: Many benefits are required in certain industries, but there are other forms of benefits or compensation that can be given to employees.

These can be used to motivate employees, but more importantly to keep your best employees and to allow them opportunities to grown within the organization. There is a long list of benefits that can be given or applied within any organization to reward their best employees and also create a family friendly environment. Work is a big part of an individual’s life, but it is not everything and there must be a balance in order for an employee to be productive. Simple changes in an employees work schedule can add tremendous value to an organization and also create more loyalty to a company.

It is more expensive to recruit, hire, train, and introduce a new employee than it is to give a raise to an existing employee. Even something as simple as a manager taking an employee to lunch and thanking them for their great performance and work ethic can mean more than just giving them a raise or bonus. Implementation of Compensation Strategies In researching ways to implement different compensation strategies, Juana has found that there has to be a focus on the reason way it is looking to change its existing compensation strategy.

“The overall objectives of strategic reward are to support the achievement of organization goals and to meet the needs of the people the organization employs. ” (Armstrong & Brown, 2006) The organization must ensure that employees are valued fairly for what they do and achieve, develop a high performance culture, and also establish its company as a place that people want to come and work for and also remain there once employed. Choosing the right compensation strategy for an organization is a crucial step before taking action.

“Implementation entails converting the strategic plan in to action and then into results. ” (Armstrong & Brown, 2006) Once the compensation strategy has been chosen, it must then be communicated with all levels of management to ensure the proper policies are put into place. A good design can be created by answering some important questions, such as how will it add value, how will it be put into effect, parties involved, reaction by staff, time required for implementation, if additional resources will be needed, and any potential problems and solutions that may be required.

In collaboration with managers, the human resource department must determine who the compensation strategy will serve, evaluate jobs, current pay rates and external pay rates, establish a pay structure and place jobs in each pay structure, administer the compensation strategy, evaluate benefits outside the organization, monitor, and adjust the plan as needed. “Implementing the compensation and benefits program is nearly as important as the process of evaluating jobs and establishing pay structure. ” (Rothwell & Kazanas, 2003)

Any compensation salary that is implemented requires employee reviews on fixed dates throughout the year to ensure people are being properly rewarded. Depending on the organizational culture, these can be done once a year or even every quarter. Merit increases or bonuses can then be awarded to the employee if all of the performance goals have been met. In a quote that Juana found, “There is no excuse in paying salaries that make no difference in the performance of your employees. ” (Retrieved from www. strategic-human-resource. com) These employee reviews can help determine which people are your top performers, non-performers and also the average performers, so that each are properly rewarded. Analysis: The most difficult and crucial part of any compensation strategy is its application and implementation into an organization. Several questions must first be answered before a compensation strategy is implemented into any organization. Cost, employee reactions, possible challenges, education, effectiveness of strategy, and time required to implement are all factors that must be looked at collectively to ensure its success.

“Remember that whatever the economic situation or your organizational financial performance is, formulating and implementing a compensation strategy will ensure the ever-readiness of your organization. ” (Retrieved from www. strategic-human-resource. com) Once the compensation strategy has been put in to place there must be follow up with employees to ensure success. Rewards must then be properly given if the goals set in place have been met to keep employees motivated. They must feel appreciated and rewarded to ensure financial gains and performance improvements for the company.

An organization needs to offer competitive salaries to not only motivate employees, but to also keep pace with other competitors. Finally, any compensation strategy chosen must reinforce the organizational structure and business strategy. Recommendations After extensive research from credible and relevant resources, Juana has found some great compensation strategies that can be applied to increase profits, productivity, and also make employees happier. It will require team collaboration and will also require some time before these strategies can be put into place.

Below is a list of recommendations that Juana has prepared for the human resource director that will aid in his decision making. 1. Recommendation One: Juana believes that nonmonetary awards should first be introduced, so that all of the “bugs” can be addressed prior to giving employees cash rewards. This will ensure that the proper compensation strategy will be effective once it has been put in to place. Gain sharing should then be introduced only after there has been success with nonmonetary rewards.

Juana also suggest that the nonmonetary awards remain in place as extra motivation and also to encourage right behaviors. Other forms of compensation such as stock options, flexible work schedules, or tuition reimbursement can later be introduced as additional benefits. These additional benefits will be easier to implement when the organization has increased its profits. 2. Recommendation Two: Similar to the first recommendation, the organization should start with nonmonetary awards prior to implementing the new compensation strategy.

Group based awards can then be introduced to different departments to create more efficient work and support a team culture. The nonmonetary awards can then be adjusted to support individual contributions to the team to ensure that every employee pulls their weight. Management and accounting should work together to ensure that enough funds are in place for rewards to avoid shortages. 3. Recommendation Three: Finally, gain sharing and group based awards should be introduced simultaneously, but only after choosing a good design.

Both of these can work together if properly implemented and also communicated with employees. It increases teamwork amongst employees, but also rewards employees that go above and beyond the job. Gain sharing also allows for employees to be held accountable if individual goals are not met. Nonmonetary awards, such as certificates or trophy’s, can be given for team and individual achievements to teams or employees who may have not received team or individual bonuses.

This can keep them motivated and work harder toward reaching team or individual cash rewards. Conclusion There are several compensation strategies to consider, but Juana has focused on gain sharing, nonmonetary awards, and group based awards as strategies that can be implemented. In addition to these three, there are also other forms of compensation and benefits that can be included with these strategies. These other forms of compensation or benefits can alone be a great addition to any compensation strategy.

Implementation is a key step before changing or adding any compensation strategy. There must be a clear focus and design of what its intentions are, so that the organization can clearly see if it will add value. Nonmonetary award is a good tool in deciding which compensation is best suited for the organization. The recommendations made are different combinations that can be applied to ensure their success in the company. Either one of the three recommendations can work for the organization, but the key is implementing them the proper way and ensuring that the company will get the desired results. The first recommendation is a great compensation that can be used to allow the employees to share in the profits of the company. The second recommendation allows teams to be rewarded for collaboration and encourage employees to work together toward a common goal. Lastly, the third recommendation not only encourages teamwork, but also holds individuals accountable for their work and also allows for individual rewards.