Total Rewards Package Strategy

Total Rewards Package Strategy

Introduction

Initially known as Mills fleet farm, Fleet farm, and home is an American company with about 47 stores located in different regions like North Dakota, Iowa, Minnesota, South Dakota, and Wisconsin. It’s headquartered in Appleton, with its central distribution center in Chippewa Falls. The company’s stores are of multiple sizes, from large stores to small hardware store formats (Hiles, 2009). The company deals with household items, fishing, hunting equipment, licenses, automotive goods, small appliances, toys, footwear and clothing, pet suppliers, farm suppliers, food, tools, sporting items, lawn and garden supplies, and paint, among others. Several company sites also have a car wash, gas mart, and auto services. After over 60 years in business, the company has become the most trusted brand in retail.

Subsequently, Fleet Farm and Home are concerned about its total rewards package. Most store supervisors and the majors have worked with the company for over 20 years and have been very satisfied with their remuneration plan. Nevertheless, during an interview with potential candidates, the company learned that its total reward package is less than its competitors (Hiles, 2009). Subsequently, the company needs a strategy to enhance Fleet Farm and Home’s total reward package to increase its competitiveness with other businesses and support retention and recruitment initiatives.

1. Components to Include in the Total Rewards Package

A total reward strategy that is effective encourages employees to stay in the company longer, work more productively, and attract more talents. According to Maslow’s hierarchy of needs, employees are motivated by five fundamental needs: self-actualization, Esteem, love and belonging, safety, and physiological. Besides, five components make up the total rewards. They include,

Compensation. This is the pay that employees receive from the employer in exchange for services rendered towards attaining the company’s strategic objectives and missions (Kaplan, 2007). Compensation enables employees to attend to the physiological like clothing, food, and shelter, which are part of fundamental needs as enlisted in Maslow’s hierarchy of needs. Compensation may include base pay, bonuses, and variable pay.

Benefits. They include packages given to workers to promote their emotional, physical, and familial well-being (Hiles, 2009). They have leave plans, retirement plans, health insurance plans, vision and dental plans, and disability and life insurance.

Work-life flexibility. All generations in the workplace today need flexibility. They can include flexible schedules, paid time off, Remote work, and parental leave.

Performance and Recognition. Employees that are high performers need recognition and feedback. Some of the recognition rewards may include regular one-to-one meetings, an employee of the month awards, and goal-specific awards.

Growth and Development. Performing employees would always want to continue growing and developing throughout their time with an organization. Therefore, initiatives that help them grow and develop are of value to them (Hiles, 2009). Such initiatives may include mentoring programs, leadership coaching, and job shadowing.

Proposed Total Rewards Package for Fleet Farm and Home Company

This reward package aims to balance the employees’ needs and the organizational objectives. Moreover, the reward package motivates the employees and attracts and retains more talents (Kaplan, 2007). This compensation is tied to Fleet Farm and home’s culture as the leading market retailer. As a result, the organization intends to lead the market with better remuneration terms.

Total Reward Package

Indirect Renumeration Direct Renumeration

Base pay

Merit Pay

Salary Wage

Protection Programs

Medical insurance

Life insurance

Disability income

Pension

Social security

Pay for time not worked

Vacations

Holidays

Sick leave

Jury duty

Deferred pay

Savings plan

Stock purchase

Annuity

Incentive pays

Bonus

Commission

Profit-sharing

Piece rate

Shift differential

Stock option

Services and perquisites

Recreational facilities

Car

Financial planning

Free meals

Consequently, the company should be able to adopt a compensation ratio matrix to determine the amount payable to every employee.

Formula Compa Ratio = Salary / Salary Range Midpoint

Example: If the midpoint is $60,000 and the salary is $75,000, the compa-ratio is: $60,000 / $75,000 = 0.8

Subsequently, every worker’s total reward package will be unique (Hiles, 2009). It will include areas specific to them, like their salary and how much the company contributes towards their retirement plans, as will be identified appropriately. However, indirect compensation will be the same for all the employees.

2. Salary and Benefits Components with Adding an Incentive Compensation Package

Even though salary and benefits usually attract the most attention during remuneration conversation, an additional type of compensation that can also enhance employee satisfaction is the incentive pay. Incentive pay is the performance-based compensation that rewards workers for achieving set objectives and goals. Incentives can be paid in gifts, additional paid leave, money, or stocks (Van Rooy, 2010). Incentives are most created for individual employees; however, an entire firm can also benefit.

Software development is one industry that provides an incredible range of incentives and perks to its workers. Google is also well known for providing resources to reduce stress and make employees happy.

Merits of incentives.

· Incentives motivate employees to work harder and better, resulting in higher outputs.

· Due to increased output, the cost per unit becomes minimal, while at the same time, the company is capable of keeping low prices, resulting in increased sales. Accumulatively, higher profits are realized by the company.

· With incentives, no worker creates an idle time because every minute is viewed in the form of money.

· Incentives reduce the supervision challenge because every worker is time conscious.

· Efficient workers can earn more money proportional to their effort through higher commissions and performance bonuses.

· Incentives can enable employers to identify dull and inefficient workers who, despite the incentive program, can only afford to earn their regular wages every month. Such employees can therefore be taken through rigorous work training or be dismissed.

· Whenever an adequate and effective incentive scheme is in place, employees are likely to more satisfied. Such employees have an outstanding commitment to work and thus, may not move out of the organization. As a result, there is a reduced rate of labor turnover.

· Incentives also help minimize grievances and complaints as every employee feels motivated. Hence, has nothing to complain about.

Demerits of incentives.

· In some cases, employees from the production sector may compromise quality to attain a particular quantity to receive an incentive. Such a scenario may compromise quality output if proper quality control is not implemented.

· In most instances, only efficient employees can gain from the incentives. As a result, other employees to do not benefit from such incentives may develop ill feelings against their colleagues, killing teamwork spirit.

· With every employee keen to improve production output, some may handle machines carelessly, increasing wear and tear.

· Some workers may experience health challenges as they try to overwork to earn more money.

· The tendency to increase output to earn an incentive may result from disregarding safety precautions leading to increased accident cases at the workplace.

After analyzing both merits and demerits of incentives, Fleet farm and home will adopt incentive schemes to motivate employees further. The company will adopt both casual and structured incentives to ensure that every employee feels appreciated in their respective area of work without bias (Hiles, 2009). Besides, the company will put proper quality control mechanisms to override some of the possible shortcomings of implementing incentive schemes.

Casual Incentive

Fleet farm and home will be recognized and awarded an employee for exceptional performance. Such awards will be in the form of gifts or small payments. This incentive mode will ensure that employees with exemplary conduct that may not directly contribute to their work output are also appreciated. Such behavior may include good customer service that, in turn, builds the company’s reputation.

Structured incentives

Apart from a simple incentive plan, Fleet farm and home will also adopt a structured incentive scheme with a specific schedule and benchmark that workers have to achieve. These benchmarks are associated with organizational objectives like efficient production, increased sales, and customer service.

3. Legal Compliance Requirements FFH Should Consider When Creating a Total Rewards Package

When creating a total reward package, Fleet Farm and Homes will consider the requirement of recommended hours of work together with minimum wage. Subsequently, the firm will abide by the state and federal laws on wage and fair pay, including overtime and compulsory breaktime (Sachs, 2007). According to the Fair Labor Standards Act, overtime schemes have to be provided for employees who work beyond recommended hours (Van Rooy, 2010). In compliance with the Fair Labor Standards Act, FFH will provide lunch breaks to all the workers and, at the same time, honor the child labor standards established by FLSA in local, federal, and state governments.

Below are additional requirements FFH will evaluate and consider while establishing a total reward package.

Federal Labour Law Compliance Checklist (Sachs, 2007).

Law

Governs

Affordable Care Act

Health Insurance

Age Discrimination in Employment

Non-discrimination

Americans with Disabilities Act

Non-discrimination

Comprehensive Omnibus Budget Reconciliation Act

Health Insurance 

Consumer Credit Protection Act