RWT1 Jason Hagelstrom business report

Topics: Employee stock option, Stock, Security Pages: 10 (2340 words) Published: July 16, 2015
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Compensation strategies

RWT1
Jason Hagelstrom
66789
07/05/13
Jeff Willard

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Table of contents:
Executive summary…………….………………………………………………………………………………….3 Introduction…………………….……………………………………………………………………………………..4 Research findings…………………………………………………………………………………………………..4 Broadbanding.……………………………………………………………………………………………4 Stock option…..…………………………………………………………………………………………..5 Team based……..………………….…………………………………………………………………….6 Recommendations………………………………….……………………………………………………………..8 Conclusion……………………………………………………………………………………………………………..9 References…………………………………………………………………………………………………………….10

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Executive Summary:
The company has asked for a review of three different types of compensation strategies that would work well for a manufacturing organization with 120 employees. There are many different ways of compensating employees such as, skilled-based pay, lump sum bonuses, salary increases, etc. The three compensation strategies that will be reviewed and compared will be broad banding, stock incentives, and team based incentives. The hopes are to install a strategy that will be beneficial to the company as far as productivity, and employee loyalty, as well as beneficial to the employees in the sense of financially.

The first compensation strategy being review is broad banding, which is taking the many salary levels within an organization and condensing them down to a handful of salary ranges. This would hopefully produce employees being more open to making lateral moves, thus becoming more skilled in different areas. An example is a company that has 15 salary ranges, deciding to move into a broad banding strategy, and going to 3 to 5 salary ranges after the completion of the move. The second one being reviewed is stock option plan. Stocks can be used as a great way to enhance employee compensation. This can be through stock equity and synthetic equity, stock equity is getting physical stock while synthetic stock is the issuance of what is known as phantom stock. This is often used as a great way to retain employees by making them vested in the organization. Finally, team oriented compensation will be the last to be reviewed. This compensation strategy is based on teams being created within the organization and different goals set for each of the teams to hit. This can be a great way to improve productivity within the organization as long as you have the right people on each teams, there are drawbacks to this approach as well.

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Introduction:
There are many different types of compensation strategies that can put into place for a manufacturing company. My goal is to look for a strategy that will improve the company’s employee moral as well as the overall success of the company. The three strategies that I will be looking at will be broad-banding, stock options, and team-based compensation. Broad banding in a nutshell is a good way to minimize the many different salary ranges into 2 to 5 ranges by promoting employees to make lateral moves. Stock options are a great way for a company to build employee moral by giving them stock within the company. Finally team-based compensations is great for a company that is team focused to reward their employees, by setting team goals and rewarding the team as a whole. Broadbanding:

Broad banding is a compensation structure that helps to promote lateral moves within an organization. As described by Matthew Budman in an article titled Mixed Results broad banding is a “method of compensation inteneded to remove salary structure as an impediment to moving the corporate culture toward flexibility” (Budman, pg. 2) What broad banding does is it takes the many ranges of salary levels that a company has and narrows them down to a smaller amount. When this is put into place it promotes an employee to make lateral moves thus helping them to gain new skills and become more diverse. As Kathryn Tyler put it in her article, Compensation strategies can foster later moves and growing in...

References: Budman, M. (1998). Mixed Results. Across the Board, 35(6), 23-28.
Tyler, K. (1998). Compensation Strategies Can Foster Lateral Moves and Growing in Place. HR Magazine.
Cardillo, R. (1994). Riding the compensation bandwagon. Business Talk, March/April, 7-8.
Watson, J, Michael, B. (2001). Compensation Strategies. Community Banker, September, 36.
Dzamba, A. (2011). Compensation strategies to use amid organizational change. Compensation &
Benefits Management, 17.1, 8.
Bolch, M. (2007). Rewarding the Team. HR Magazine. February 2007, 92.
Gross, S. E., & Blair, J. (1995). Reinforcing team effectiveness through pay. Compensation and Benefits
Review, 27(5), 3
Gerhart, B., Minkoff, H., Olsen, R. (1995). Employee Compensation: Theroy, Practice, and Evidence.
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