Strategic Compensation

Strategic Compensation

Strategic compensation plays several roles in any organization. Organizations employ strategic compensation plans to ensure that they attract the best employees and retains the best professionals. The best compensation plan significantly reduces employee turnover and increases profitability in any company. Employees seem more interested in working for organizations that offer the best compensation plans. Compensation plans include basic salaries, terms of payment, and bonuses, and benefits. Analysis of a case study studies the effects of compensation plans at ARISE.

ARISE uses a compensation plan hinged on three primary objectives. First, employees receive a basic salary since they get full-time employment for their services. The situation makes the employees loyal to the company, and they seek to work for more extended periods compared to other part-time employees. Second, the strategic plan is based on the accumulation of tips. ARISE anticipates that individuals visiting the spa would be willing to offer higher tips, especially if they became committed customers (Beer & Claire, 2012). Lastly, the company offers benefits and bonuses to the employees, making the company’s job position very attractive.

However, despite the attractiveness of the compensation plans used by ARISE, the strategy does not seem to promote a competitive advantage. ARISE wishes to [provide the industry with a steady stream of professional services. Low employee turnover makes it hard for ARISE to stick out as a business that offers professional services. Employees find it easier to work for other spa institutions because of better pay. Employees disregard the training that they receive in wellness coaching since customers seem disinterested in wellness coaching (Beer & Claire, 2012). Overall, the strategic compensation plan used at ARISE significantly cripples the competitive advantage of the company in the spa industry.

The best way for the company to improve the continuous pay plan would be to involve employees in decision-making. Decision making in the company is not done through consensus in the company. Instead, decision-making is left to the top heads that sometimes do not come together before the implementation of any compensation plan. Involving employees in the decision-making process would help the management learn about crucial areas the administration should focus on when developing a compensation plan

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The use of team-based incentives offers a variety of benefits. The organization finds a suitable way of measuring its performance. The organization can assess whether the employees meet organization goals through assessment of team performance. Furthermore, the organization meets its objectives through team spirit. Team driven incentives ensure that employees work together to eliminate any obstacles that hinder organizational performance. For example, ARISE used team incentives to reduce employee slacking in the company. Lastly, team incentives are based on organization values and goals. The organization focuses on its objectives through the use of teams. Each team is tailored to meet the needs of the organization.

Overall, the use of a team-based incentive plan at ARISE would help the organization achieve its goals. ARISE could help create a loyal customer base making it easy for the organization to breakeven soon. Moreover, ARISE would also eliminate inefficiency in the company making the organization meet its daily targets and reducing time wastage in the company. However, the VP would have to include employees in the decision-making process to avoid a lack of representation. Inclusion in the decision-making process would help the organization develop an excellent compensation plan. The compensation plan would meet the requirements of the company and consequently improve turnover in the company.

Reference

Beer, M., & Clair, L. S. (2012). ARISE: A Destination-for-a-Day Spa. Harvard Business School