Assignment task:
DH Marshalls was founded in 1951 and was an upscale retailer located in Chicago. After a significant downturn in business, the company sold its retail locations and changed its business model to provide retail outlets for cruise ships. Its Headquarters is in Orlando, Florida.
During COVID, as ships were unable to sail, DH Marshalls furloughed 95% of its employees. Fortunately, the company has been awarded a contract to provide gift shops in a hospital system with locations in Chicago, Dallas, and Jacksonville.
After the shutdown ended, many of DH Marshalls' employees did not return. Their employee furloughs were unpaid, and the company thinks that many found jobs elsewhere as other retailers were better able to sustain business during the COVID shutdown. There is also concern that the finest talent is not being attracted to the retailer as that talent segment is concerned about job security at DH Marshalls.
The company has 50 employees, but they know that to meet the requirements of the new hospital contract, they will need to double their population. Most staffing will be in Operations - employees and leaders for the gift shops; buyers to purchase the merchandise for gift shops, and supply chain professionals to partner with vendors to get the goods to the gift shops.
It is February of 2021 and you have been hired by DH Marshalls to replace the Director of Total Rewards. You are the company's first compensation and benefits professional. The company has some compensation and benefit programs, but not a formal plan. The cruise ship industry is still not fully operative. DH Marshalls is a privately held firm, but it still has a Board of Directors. Despite the uncertainty around the business related to cruises, the Board is optimistic about the company's future due to the new hospital gift shop contract. Because they are privately held, they are focused on reserving cash.
The Board has met and determined that they need extraordinary talent to turnaround the business. To attract and retain talent, they must create a Total Rewards Policy. Senior leadership has asked you to develop a Total Compensation Strategy. The company would like to see your recommendations and associated costs. In addition, the company feels that collaboration is necessary to innovate, and since the cruise ship industry is still not operational, it is considering bringing all remote employees to its Headquarter in Orlando. The company knows that it will lose employees who are unwilling to relocate and will also incur incremental costs associated with expanding its Orlando office.
Please review the company's current Total Rewards Program.
Compensation:
New Hires:
Seasoned Candidates are/were offered a 10% increase over their salary at their previous employer.
Candidates straight out of college are offered a salary of $60k regardless of function
Hourly Employees - minimum wage for their respective state
Promotions/Merit:
Salaried employees are given a 7% increase for each promotion
The company gives merit equivalent to the national average - around 3%
Short-Term Incentives are only provided to:
The Executive team - CEO, CFO, CHRO and Chief Supply Chain Officer
Store leadership - Store Managers and the VP of Operations
Benefits
Medical Plan - One plan with an extremely low deducible and very high employee premiums
Dental and Vision - Both are reimbursement plans and employees are reimbursed for any qualified dental and vision expenses. This is a very manual process requiring work.
Life - The company provides $20,000 in life insurance benefit.
Disability - There isn't a paid disability program.
Retirement - The company provides a 401(k) plan that allows employees to save for their retirement, tax free, but the company doesn't match employees' contributions.
Paid Time Off - The company grants one week of PTO regardless of function or tenure.
Eligibility for Benefits:
Headquarters and Distribution Center Employees at 90 days
Hourly Field Employees at one year averaging 30 hours per week
Work/Life
DH Marshalls' employees work remotely. It was important for employees to be near cruise ship ports - Port Canaveral, Miami, and Galveston - and there wasn't a large enough population to warrant a HQ in Orlando. This had been a key differentiator for hiring and retaining the best talent because so few other retailers allowed employees to work from home. As more employers allowed working remotely as an option, it became less of a competitive advantage.
Flexible Work Schedules - Since the operations team work on cruise ships and the stores have long/odd hours, the company allows leaders in their respective areas to make the teams' schedules based on the need to support the field. The company sees this as a competitive advantage with respect to hiring and retaining talent.
Staffing - See Organization Chart Download Organization Chart.
The following should be considered
The HR team is at capacity and can't take on any additional manual work.
Open Positions must be filled.
The only adds to staff (i.e., new positions) will be in Operations and Supply Chain to support the business.
All Payroll and Benefit functions are in-sourced.
Questions
Provide a recommendation to the Board. The following six points should be addressed in recommendation:
1. Total Rewards Strategy
A. Where is DH Marshalls is in the Company Life Cycle
B. Describe how the company's industry will impact the Total rewards Strategy
C. Describe the steps to develop the strategy
2. Concern has been raised that Store Managers should be considered Non-Exempt. How would it be determined if store managers are appropriately designated according to FLSA?
3. How should benefits change? What factors should be considered?
4. Is there legislation that would need to be considered when changing the benefit plans?
5. How can benefits administration be managed given the headcount limitations?
6. What recommendations should be made for Short and Long-Term Incentive plans?
- Who is eligible?
- What mix of fixed vs. variable pay is recommended?