Compensation increases must be determined by a workable and properly designed work performance management system. All employees of CORE must have their work appraisals to understand their contribution to the success of the business. The appraisal system will be used to rank and rate every employee, and it is that system that the compensations for the employees will be based on every end of the year to determine salary increases, bonuses and other incentives like training and promotion. This paper examines the current compensation status of CORE and from that develops a plan to manage the arbitrary compensation increases and provides recommendations on how to manage the red-circled and green-circled employees. The paper looks at the pros and cons of conducting market surveys to compare the compensation benefits across the same market dimension of online retailing. A properly designed appraisal system that captures employees work performance is the solution to managing compensation increases in any organization.
Compensation Increases Management Plan
While CORE will be implementing the total reward elements, it is important to understand that all the decisions that it will be arriving at must be ethical, legal and in tandem with the organizational constraints. From the ethical perspective, CORE will have violated the human rights of its employees by reducing their salaries and benefits (Gerhart, Minkoff & Olsen, 1995). If it were to reduce the highly paid staff salaries (red-circled), it might attract more turnovers subjecting it to more challenges of keeping up with the business demands. On the other hand, it has to increase the salaries of the lowly-paid staff (green-circled) because if that is not done it would look discriminative of that particular group of employees.
Legally, reduction of staff salaries can lead to lawsuits on constructive dismissal because the affected employees may opt to leave and sue the company (Gerhart, Minkoff & Olsen, 1995). Similarly, it will be a violation of their agreement contract whose terms of service have not captured the issue of salary variation downwards. The company cannot reduce the staff salaries but must seek means of ensuring that the compensation for the employees stays within the standard market rates without being seen to violate their rights or discriminated.
Managing the Red-Circled and Green-Circled Employees
Managing the red-circled employees is more difficult than the green-circled ones. CORE in its resolve to re-design the job descriptions, it will have to declare some positions of job groups redundant and hence the occupiers of the positions (Gerhart, Minkoff & Olsen, 1995). Re-designing the jobs will highlight new skill levels and educational qualifications which will affect the highly paid employees whose salary was haphazardly increased without a clear consideration for skills and qualifications. The company, however, will experience some incidences of turnovers from that action, but it must be done carefully to ensure that it does not result in constructive dismissal claims or lawsuits. The new job descriptions will provide an avenue to solve the red-circled employees who if they have to leave without feeling aggrieved the company will recruit new skilled, talented and adequately paid employees as per the labor market rates.
Managing the green-circled is an easy option for CORE. The company will have to increase their salaries but at the same time expect that the red-circled employees will accept the new terms or vacate. The re-designed job descriptions will support a good working environment for the green-circled employees. This is a delicate balance that the company must involve consultants of professionals to ensure that the decisions that will be made do not have a negative impact that is either legal or ethical (Gerhart, Minkoff & Olsen, 1995). The company will have to undergo a fresh overhaul which is expensive, but the long-term effects will be good for the business and the employees who will have clear models of compensations and job descriptions. Involving an external consultant in streamlining the gaps in the compensations will appear as a neutral analysis of the situation.
Future Market Comparator Surveys
Cheap is expensive. CORE must take part in market surveys and refrain from the use of the third-party sources. While third-party sources are simple and cheap, the reliability of the information from such sources is not credible because it is generalized and non-specific. CORE cannot purport to use its internal systems of compensation without reference to a market standard because that will lead to underpaid or overpaid employees. The result of such a case is high turnovers or low-profit margins respectively (Odunlade, 2012). Although CORE is just growing up, it is important that it comes from the ground strong with clear structures and policies that will hold it firmly in the competitive business. That will require additional investment because skilled and talented employees can only be attracted to a company by looking at the structures, principles, and values that an organization has in place.
Participating in the future market surveys is not an option for CORE because of the pros the exercise has compared to the cons. The market surveys are not done annually but can be done after every three or five years which means that the exercise can be budgeted for to get credible and reliable survey results that are related to the online retailing business without generalization. However, if the company does not have internal personnel who can conduct such an exercise then it will be prudent to outsource the activity but be done strictly for the company (Odunlade, 2012). Generalized surveys will not be useful to the company because the positions may have the same name and job descriptions but the working environments may be different thus requiring different compensation packages. The interpretation of the survey data may be different for an organization that is not engaged in online retailing because their variables may be different making the final findings that should be adopted not relevant to CORE.
The market survey should be conducted on firms or companies engaged in online buying and selling of products. The method to be used in the survey data collection must be able to guarantee reliability meaning that online questionnaires should be avoided and use the preferred one-to-one face interviews (Odunlade, 2012). The survey should consider getting information from government agencies and compensation consultants to compare with the final findings of the survey that will be carried out by CORE or an outsourced partner. The data processing tools that will be used must ensure that the data can be synthesized and organized in a form that statistical analysis and computation can easily be done.
Conclusion
CORE is in a familiar situation in which start-up organizations find themselves in especially if they did not involve consultants in coming up with the company compensation structures. Starting up a new business requires the involvement of consultants or experts who will provide important information on pay rates, benefits, and incentives. Random salary increments are not sustainable because they consume most of the business profit margins even when the positions contribute little to the growth of the company. Correction of such a situation calls for an expensive exercise that will overhaul the compensation structures and develop new ones that factor in the market standards and qualifications.
References
Gerhart, B. A., Minkoff, H. B., & Olsen, R. N. (1995). Employee compensation: Theory, practice, and evidence.
Nazir, T., Shah, S. F. H., & Zaman, K. (2012). Literature review on total rewards: An international perspective. African journal of business management, 6(8), 3046 – 3058.
Odunlade, R. O. (2012). Managing employee compensation and benefits for job satisfaction in libraries and information centers in Nigeria.
