Case Scenario:
You are the Director of Compensation and Benefits for Lansing-Smith Corporation, a 6-month old sales and service organization that currently has a workforce of 150 employees. You recently joined the organization when the Vice President of Operations decided to move the Compensation and Benefits function out of the Accounting Department, into a separate function. From your own observations you have identified several areas in need of review, redesign or development, including projects such as an audit of current pay plans to ensure they are aligned with federal regulations, an analysis of various pay plans to assess which plans will provide maximum benefit for Lansing-Smith, extensive job analyses to ensure a solid understanding of each position, job evaluations to determine the worth of the positions, consideration of various incentive plan designs to identify a plan that effectively drives individual and group performance to achieve production goals and research, development, communication and management training for a company-wide performance appraisal process.
You are dedicated to developing compensation and benefit practices that are motivating and empowering for employees. You are confident that with well-developed programs and practices, employees will be motivated to perform at higher levels, thereby driving overall company performance.
Details: The VP of operations asks for you to prepare a report for her and upper level management as they consider shifting pay structure.
In your report, discuss various pay plan options- merit-based pay, pay-for-performance, merit plus incentive, and pay-for-knowledge plans.
Within your report you should discuss the advantages and disadvantages of each plan, the type of company or environment is each plan best suited for, and how each type of plan fits in with current philosophy on compensation design. Give your opinion, with solid reasons, as to which choice would be best for Lansing-Smith.
Here is an example organization's review of pay plans and their shift to variable pay:
ATcon: 7X7 ASM Pay Plan (https://www.atconsse.com/products/downloads/ATcon-7X7-ASM-Pay-Plan-SSE-Rev41404.pdf