Implementing a New Compensation Program

New Compensation Program

Discuss how changing the compensation program was consistent with the strategic shifts occurring in the organization.

This program reflects profound shifts in the company's philosophy regarding its employees and overall organizational strategy. It shows a more forward-thinking focus on the part of the company. Formerly individual jobs and job descriptions have now been changed with the intent of using a more team-oriented approach and cooperative philosophy amongst employees. This cooperative and team-oriented approach encourages employees to perform to their maximum capacity as members of a team. It states that all workers have a responsibility to all of their fellow employees, as well as a responsibility to simply monitor and institute quality controls over their own work performance. This shift takes away the focus on rewarding the individual on a personal level and shifts the focus to the object of the project, encouraging workers to be 'task oriented' rather than to simply do their job, punch the clock, and go home.

The new approach does contain some valuable individual incentives. Workers do receive individual rewards because they are increasingly required to be skilled at multiple tasks. This decreases boredom but more importantly increases worker's on-the-job education and training and the worker's ability to be promoted within the organization. It increases worker's employability within and without of the organization, creating a sense of potential loyalty to the organization. The pay-for-performance program also encourages workers to perform to their maximum personal capacity and to work on perfecting their tasks, yet without an expense to teamwork. If the task is performed well, everyone is rewarded. The emphasis on skill blocks, and the holistic nature of the tasks additionally encourages workers to view the tasks performed in light of the company's overall objectives in the long-term, rather than simply focusing on their individual goals and their individual labors in the short-term on a day-to-day basis.

Question 2: What difficulties can you identify with shifting to the new compensation program from the traditional ones used in many production setting?

No program is ideal, however. With such a pay-for-performance program, older employees and senior employees can become alienated, feeling that their loyalty is not remunerated. Of course, any de facto system of 'tenure' where time at the company, rather than immediate performance and excellence, may create a system of loyalty but it can also create complacency. Still, there is always a trade-off between rewarding immediate excellence and rewarding loyalty.

Also, the encouragement to learn new skills can encourage workers to 'bite off more than they can chew.' In other words, this can encourage workers to try to learn new skills simply to increase their level of pay. Workers may become better educated at multiple tasks, but their level of mastery at individual tasks may also potentially decrease, depending on their ability to learn quickly and thoroughly, because they are so eager to assume new skill blocks for greater potential pay.