Unpopular Pay Plan
This case is about a top chemical company that is in the process of launching a compensation plan in which the CEO, Sam Verde, believes that it will bring not only continuous improvement but also equity among the employees. A committee is gathered to discuss the issue of the compensation plan; here, the CEO confronts the idea that changing plans is one of the issues very few people can agree on. However, the CEO’s idea does not sit well with others in the team. Some members develop a payment plan that the CEO likes, although he has some reservations since he does not know whether the employees will accept the risk. In the committee, experts on compensation reveal where the company went wrong with its plan three years ago and how the CEO can be able to bring change successfully.
This case relates to the internal structure and what shapes it, a concept we covered in chapter three. Sam Verde, the CEO of the company, should assemble all the employees to address the anticipated change to assess if it aligns with the company’s cost implications, technology, strategy, and human capital. The Human Resources department in the company should address this issue and give their opinion. Also, the employees should be involved to find out if they are interested in the compensation plan that the company wants to implement.
The concept of Egalitarian, which we covered in chapter three, which involves compensation methods in an organization, is related to this case study. This concept is all about organizations ensuring equity while handling the employees. Top Chemical Company is willing to adopt a compensation plan that will help the employees into groups that will enable them to exercise their expertise together while working. In the compensation plan, the employees will expect some incentives for each group, and they will be able to share equally without discrimination. However, the incentives will be dependent on their performance. In any organization, the performance compensation should align with the strategy of the company, depending on the policy it adopts. Here, the HR department of the company a crucial role in determining the rewards structure since all the actions taken by the company must lie within the HR policy of the specific company.
This compensation concept (Egalitarian) proposes for all employees to have equal rights regarding their incentives. This revolves around the hierarchy, individual expertise, and contribution in ensuring that everyone feels equally handled in the company. The method ensures that there are minimal chances of conflicts in the organization since every employee feels like a member of the organization. The CEO’s plan aims at ensuring equity in the organization; this system entails quality for all programs in the organization. This proposal will ensure that the company will not only continue to produce high quality good but also at low costs. The proposal will mainly ensure that the company reaps huge benefits because everyone in the company will be committed, which will boost the morale of the employees; motivated employees are a key success factor for any organization.
The company’s CEO assembles a committee whose main objective is to assess and give their views about the proposed plan. The Top Chemical Company upholds openness in the decision-making process because everyone in the committee is given a chance to air their views about the proposed compensation plan. The concept of incentives, which is part of the Pay Model, is used in this case study because the aim of the committee is to determine the internal compensation structure of the organization and the implications that are likely to cause in the payment method. The company intends to boost the productivity and efficiency levels throughout all departments. In the committee, some of the members are against the proposed plan, and their argument is that some of the employees are unlikely to give their best in the company because the rewards will be issued as a group.
On the other hand, some committee members support the proposal, and their argument is that compensation based on individual efforts might result in conflicts in the organization. Like the Egalitarian method of compensation, the proposal has some disadvantages because a section of employees might feel that they are putting more effort. Their incentives should also be higher and not based on a group.
This case helps understand the internal pay structures and how organizations apply their compensation plans to ensure that they develop. While implementing a compensation plan, an organization can consider various factors such as employee competency, responsibilities, and also their skills. Although the compensation plan proposed by the TOP Chemical Company CEO might lead to some benefits in the organization, it can also lead to instability in the company since some members of the group will overwork while others will be reluctant since the compensation will be equal regardless of the efforts put. CEO’s like Sam Verde should understand that employees in an organization have varying working rates; this can lead to unfairness to the employees, which leads to internal conflicts. It is the obligation of the companies to ensure that they learn the behaviors of their employees, and in doing so, they will be able to observe the employees who will perform well as individuals and those who will perform well while in groups. This will enable any given organization to categorize their employees, whereby the compensation plans will ensure everyone walks satisfied by the end of the day. Any organization needs to acknowledge that individual effort is important in achieving the set objectives and group cooperation.