Case Study
Accent Incorporated is a financial consultancy company offering a range of financial management services to medium sized businesses operating in Kuala Lumpur, Johor Baru and Penang. The company has been of late experiencing strong competition in the promotion of its existing services. To respond to such competitive pressures, the senior management agreed that a new compensation structure had to be introduced, that would facilitate the development of a more dynamic and adaptable workforce. The area of pay systems is one of the most vital in the whole field of employment relations and of major interest to workers on what they are to be paid and how they may increase their earnings Following your appointment as group HR manager, the Chief Operations Officer is seeking your advice for the design and implementation of a new & revised compensation policy and practices.
The current compensation structure was viewed as traditional and paternalistic, for the reason that employees were rewarded for length of service and not on performance and contribution to organization goals. The pay structure contained many pay grades with narrow pay ranges, put in place following a job evaluation exercise conducted several years ago. Performance review systems emphasized employee tenure and effort to a greater degree than “bottom line” related performance results.
The management requests that the new compensation system, would focus heavily on market value, using pay survey data that specifically matched job responsibilities, using a “broad banding approach” with fewer job grades, and wider pay ranges. A new performance management system must be developed, linking individual and group results to corporate goals.
Answer All Three (3) Questions
Question 1
Discuss the benefits of offering a total rewards system , that includes both financial and non-financial compensation components within such a system as well as the pay administration process that delivers such rewards effectively to the workforce.
Question 2
Organisations are increasingly adopting philosophies to improve business performance through developing pay structures and systems which promote the acquisition of new skills, increased flexibility and greater awareness of business requirements. Within the context of the company, critically analyse the relevance of considering the recent trends in pay structures that support such philosophies and how it can be implemented effectively.
Question 3
Pay systems must be focused on rewarding the employees for their contribution, skill and performance. List and discuss on any FOUR (4) objectives that the company must consider to ensure pay effectiveness. Most companies also provide fixed and flexible pay plans within the total rewards systems. Provide a critical analysis on any FIVE (5) main differences between basic fixed rate schemes and incentive schemes.