The biggest challenge for any company and its management in current scenario is to keep the employees motivated and task oriented and for that, it is required to effectively design the compensation plan and pay the employees effectively. The compensation structure for Kudler can be designed by using two approaches that is job-based approach and person-based approach.
Job-Based Approach:
In job-based approach, the compensation is based on the job performed by an employee. It does not consider the skills or competency that the employee is having. The employee gets evaluated on the tasks, he has completed and value he brought for the organization.
Store Manager – Store managers are the people, who operate, maintain and manage the stores. They are responsible for all the major activities of the store like increasing sales and revenue, maintaining operating expenses, shrinkage control, inventory management, floor management, product display, employee recruitment, employee performance management, employee training, customer service and overall performance of the store. The compensation of the store manger will be a combination of basic salary and certain percentage of commission on achieving desired store profit. The compensation will be divided as 80 percent basic salary and 20 percent incentive. Keeping in mind the high responsibility of the store manager salary will be highest among other employees and which is around $ 1000 per week.
Cashier – Cashier is responsible for maintaining information related to cash inflow and out flow from the store. He issues receipts to the customers and maintains a record of the same manually or electronically. He also adjusts any discount, promotional offer or coupons running by store in the bill. A cashier does not hold any other bigger responsibility. He is only required to perform his task accurately. The compensation of cashier should be around $ 550 per week.
Stock Person – stock person is responsible for maintaining the record of stock. He keeps a track of all the goods moving in and out of the store. He monitors the inventory of the store for all categories that store serves. He is responsible for displaying the items and putting up signages in the store. The compensation can be offered to stock person should be around $ 500 per week.
Specialty Department Worker – this person is responsible to provide all support functions to the specialty department manager. He will be responsible for ensuring the quality standards of products, equipments, stock arrangement and stock display. He will provide his assistance to department manager in performing various tasks related to store’s day to day operation, stock purchase and pricing, performing promotional activities, in developing strategy and planning, store cleanliness and safety, and other general activities. The salary of specialty department worker will be around $ 650 per week.
Bagger – employee will be responsible for managing trolleys and carts, assisting customers in moving purchased items to their vehicles, cleaning of undesired stock from the sales counter and packing of goods purchased by the customers in the bags. The compensation of bagger will be around $ 400 per week.
Person-Based Approach:
In this approach compensation structure is based on the skills or competencies of the employee. Employees get paid for their experience, knowledge and skills irrespective of requirement or usages of skills in the job. We will be using skill based approach for defining compensation structure. Skill-based approach is employee friendly approach. It provides motivation and flexibility to the employee. With the help of skill-based approach company can increase the productivity and quality.
Store Manager – person should be multi-tasking and past experience is also add advantage. Other skills required for store manager are good communication skills, training, operation management, inventory management, payroll and risk management, and sales. The educational requirement is high school or degree in business.
Cashier – for cashier following skills are required; basic mathematic, data analysis, friendly behavior and good communication. A high school diploma is sufficient for a cashier.
Stock Person – for stock person it is required to understand inventory management and stock lifting. The educational requirement for the stock person is high school diploma.
Specialty department Worker – A specialty department worker is required to have following skills; good communication, friendly behavior, data analysis, strategy and planning management, financial management, and operation management. Educational requirement is college diploma in business. People having past experience have an added advantage.
Bagger – for bagger no specific skills or qualification is required. He should be able to lift the goods and should be friendly.
In skill based approach the compensation increased if employee is adding more skills while in job-based structure compensation increased after promotion and when employee is meeting targets. Skill-based approach is more useful in utilizing skills of employees effectively while job-based approach enforce employee to bring value and increase the revenue for the organization.
There are various organizations like Gap, Starbucks, McDonalds etc. they design their compensation structure after doing various trials. They implemented different structures in different stores and monitored the performance of those stores. After lot of research they finalized the compensation structure for their employees. In the retail stores the best suitable compensation structure is a base salary with commission on the gross profit of the store. The percentage is varying but majority of the retailers use 80 percent base salary and 20 percent commission.
References
Nicole DeHoratius and Ananth Raman. (n.d.). Store Manager Incentive Design and Retail Performance at Tweeter Home Entertainment Group. Retrieved January 13, 2012, from faculty.chicagobooth.edu: http://faculty.chicagobooth.edu/nicole.dehoratius/research/Tweeter.pdf
Wasserman, E. (2009, December 16). Inc. Retrieved January 13, 2012, from www.inc.com: http://www.inc.com/guides/sales-compensation-plan_pagen_2.html
