Case Analysis: In a world of Pay Typware needs to address the compensation problem that HR Manager Renate Schmidt is facing in assigning the proper compensation plan for foreign employees. Here Typware’s CEO has asked Renate to work out on the compensation strategy that brought into agreement with the organization’s business strategy. This compensation plan will not help the Typware to compensate new hires and leaders in future and will minimise the difference between salary of outsider and previous employees.
Typeware’s lack of strategy on the compensation problems is not letting Renate to take any decision in the recruitment process of Anne Prevost. Renate need to figure out how to balance the organization requirement and satisfaction level of other employees who have been with the organization for quite some long time like Jurgen Mehr. After probing Renate found out, Pay is not rationalized at all, and had noticed increasingly troublesome salary and benefit disparities among the managerial role.
To meet the organizational requirement it’s very crucial to keep Anne in Germany for several years, Typware should determine which compensation benefits are essential and then decide whether the expected advantages of having Anne on board will be worth for the organization. Typware must make the pay package appealing enough for Anne to accept the job yet leave some merit-based variables in the pot as incentives for her to deliver results. Typware wants to contend as a German organisation operating as Multinational.
It can be based on the widely used conventional approach of equal pay for equal work, which encourages assignees to focus on pay trends and living costs in their home and host countries rather than on the company’s business strategy. To get over her CEO’s distaste for overly structured plans, Renate should alter the balance-sheet approach to one that includes a core package and a tailor-made package. The package would be meant to meet Anne’s financial expectations, based on her home country’s standards for base pay and variable benefits.
A customized service would offer Anne the flexibility to deal with her unparalleled circumstances, such as elder care for her mother and children’s German gymnasium requirement. Renate may also try for an arrangement to phase Anne into a German employee package, depending on the anticipated duration of her initial contract. The intent here is to help her make the transition into the international assignment. The effect we observed also suggest that no single theory can fully explain how compensation relates to organizational performance.
The accomplishment of HRM is leading to greater learning within the organization. It means falling collective regulation of the employment relationship and increased scope for managerial discretion in composing the individual worker’s terms and conditions. In pay determination terms, this has meant increasing individualisation of pay, especially the growth of individual performance-related pay, increased variability of income for employers and widening pay dispersion.
But there are repercussions associated with such strategies like bargaining fragmentation and the shift towards individualism and according to past this have made dampening effect on many organizations. Thus only pay became more contingent and more individual based, this gave rise to concept of ‘Contract’ working. Under such situation, Renate should provide a compensation plan that boosts the organization achievement rather than frequently pulling off case-by-case compensation packages.
There is an utter importance of considering the different elements of a compensation plan and relationship between pay systems and organizational performance. Also its important to understand pay level strategy and pay structure decisions. Compensation system must be internally fairish, externally competitive and coextensive with performance. It needs to focus upon a pay structure which can appeal, retain and motivate employee in a long term.