Within Plastec Company, there was registered a high rate of turnover in the production line, especially among women and minorities, which indicated an informal organizational behavior that influenced the former employees to resign. The informal organizational behavior was based on gendered or racist jokes and biased remarks upon these vulnerable groups. In addition to this reason for the high turnover at Plastec, employees also left the company because they felt that the benefits that they received inside this organization were lower than in other companies activating in the same area. These problems require a strategic compensation intervention, needed for addressing the organizational values, the payment, benefits and rewards, career development plans, talent management and training programs (Cook, 2006).
Strategic compensation plan is meant to increase organizations’ productivity, effectiveness and performances, by increasing the individual employees’ capabilities, working morale and involvement in the working process (Carr & Nanni Jr., 2009). These desiderates are Human Resources objectives that need to be customized on the specificities of each company. In Plastec’s case, the company requires immediate intervention in establishing a corporate culture, which to clearly define organizational values to which all employees should adhere. Respect for colleagues, respect for diversity in any form (gender, race, ethnicity, sexual orientation, political or religious expressions) should be organizational values with which every employee should conform. A no tolerance policy should be applied, leading to contract termination for the employees that deviate from these principles. In this case, the training on harassment prevention, diversity and respect that Paul suggested for Roy and John is an effective tactic for assuring the applicability of the organizational values (“Overview of Plastec”). The training should be further applied to all employees in the company. After the diversity and respect training the employees should sign an agreement that they understand and agree with the company’s policy of respecting all their work colleagues and that any deviating behavior will lead in the termination of their work contract.
The strategic compensation plan should align the organization’s objectives with the employees’ performances, evaluated at multiple levels: individual, team, business unit or corporate level (Gomez-Mejia, Berrone & Franco-Santos, 2010). The analyzed case study indicated that evaluations for managers were performed once per year. However, recent studies indicate that it should be performed on a multiyear basis for establishing the level of rewards and payment (Gomez-Mejia, Berrone & Franco-Santos, 2010). The case of Felicia, as presented in the case study, would be easier to handle, either in contract termination if her performances are poor, or in career progress and increased payment, if performances are good (“Overview of Plastec”).
Consistent training for skills and abilities development of employees in various hierarchical levels should be aligned with their career development plan and should lead to a fit between strategy and personnel appraisal (Carr & Nanni Jr., 2009). Moreover, a transparent communication about the criteria used for evaluating the job performances and providing raised salaries or rewards should be carefully developed.
Because in Plastec many of the employees that left the company argued their termination by stating that other companies provide better wages and benefits, Plastec should develop an accurate benchmark, clearly indicating the level of the benefits that it offers to its employees (Cook, 2006). Paul should emphasize Long-term benefits such as the retirement plan or the half insurance provided by the company in case of contract termination and these benefits should be compared against the benefits of other companies activating in the same or similar areas (“Overview of Plastec”).
Regarding the salary level, Paul should develop a corporate communication for informing employees about the performance-based program as part of the strategic compensation plan. The program will provide visible indications on how employees’ performance will be measured for each role, defining the level of employee involvement, required skills and expected results that will lead to higher compensation. Motivated employees are more productive, hence increased employee performances will lead to higher compensations and to reduced overall turnover.
References
Carr, L.P. & Nanni Jr., A.J. (2009) Delivering results: managing what matters. New York: Springer Science+Business Media, LLC.
Cook, M. (2006) Compensation as a retention strategy. Exchanging Views Series. Vol. 4, pp. 1-23.
Gomez-Meija, L.R., Berrone, P. & Franco-Santos, M. (2010) Compensation and organizational performance: theory, research and practice. New York: M.E. Sharpe, Inc.
Overview of the Plaste Company. (n.d.) Course material.
