HR Management Assignment help on : COMPENSATION STRATEGY
Compensation strategy has become an extremely important thing for the success of any organization today because it is essential for the development of an effective and competitive organization. If a proper compensation strategy is not applied in the organization it will destroy the performance of organization within few years and the company becomes incapable in utilizing the full potential of its employees (HR Management, n.d.). Similarly in the case of Green Thumb Garden Center Mr. Leonard Culpepper implemented the compensation strategy according to his organizational view as then it was a small organization and it was easy to understand and evaluate the performance of every individual without having a proper compensation system but since Green Thumb is now a big organization it requires a proper compensation strategy. Due to the lack of a compensation strategy the organizational performance of Green Thumb has decreased. It requires such a compensation strategy which can help it in regaining its profitability in short run as well as in expansion for long run. Compensation strategy is a function of HR strategy and deal with the organizational position on the job market. The responsibilities which compensation strategy handles are cash requirements of the employees, bonus principles and rules of the basic salary (HR Management, n.d.). Previously in Green Thumb Mr. Culpepper did not implement compensation strategy as the compensation was paid to the employees according to the understanding of Mr. Culpepper about their performance. But now the company is in the need of a compensation strategy which can give proper compensation to the employees according to their performance.
Many organizations today use several techniques of compensation. These techniques mainly include incentives or variables. In this type of compensation an employee gets an increment in his or her salary according to his or her achievement of the predefined targets. Also there is a technique of payment based on skills. Employees who are having more skills are getting higher salary. Apart from above competency based payment is also there (Chulik, A, n.d.). Now it is the responsibility of Green Thumb’s top management to choose an appropriate method of compensation. Green Thumb has two objectives currently first to regain the profitability of the business in a short period of time and second expansion of the business in long run.
While keeping both the objectives of the company in mind Mr. Matthew can go for a compensation strategy which is a mix of above mentioned strategies like incentives and variables, skills based compensation. Green Thumb can follow below mentioned points for developing a compensation strategy:
- Employees who are doing same kind of works should get comparatively similar wages.
- A variation in the compensation is acceptable according to the key roles and responsibilities of the employees (Cho, C., 2003).
- Company can also use skills based compensation as those employees who are well experienced and posses better skills will get greater responsibilities and will get paid higher salary accordingly. Since Green Thumb has created long term relationship with its employees obviously it can give them greater responsibilities. It will also be helpful in the expansion of the business of Green Thumb.
- Incentives based compensation would be very beneficial for the company’s first objective. If it wants to regain its profitability in a short period of time then it need to improve the performance of the organization which can be done by increasing the performance of every individual (Cho, C., 2003). Each individual will get targets according to his or her job responsibilities and after achieving the targets he will get extra salary as incentives. It will motivate the employee towards their work.
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