Emerging Pharmaceutical Company (EPC) has successfully grown into a global drugs manufacturer with a large workforce distributed across all of its branches in the world. The company’s success can be attributed to private investors who generated a total of 3 billion dollars in three years. In spite of its progressive growth, the company has been facing challenges from its rival, Medtronic, which offers a better benefit and compensation plan to its employees.
In comparison to Medtronic Company, the most recognized point that has earned the company an edge against EPC is the health plan, such that the company has a more comprehensive than the 401(k) plan. Another main issue is the market “right pay,” such that 10 percent of the respondents highlighted this issue as being part of the problems at the company. Other issues that have been mentioned are closely linked to the pay rate based on performance, such as pension match, variable pay option. Medtronic seems to have better performance based rates across variable compensation and benefits packages by providing many options for pension plans, health plans, and benefits. An overview of this case study is that the central issue that has extensively been mentioned is the health and benefit pay packages, which are the reasons employees have been choosing Medtronic over EPC. Therefore, this analysis will suggest that the best solution for EPC would be developing a better healthcare plan and variable pay options.
Delegate your assignment to our experts and they will do the rest.
Issues of Concern: Qualitative and Quantitative Data
EPC must review the qualitative and quantitative data in order to identify key issues which have contributed to the high turnover rate despite the company performing well in the global market. Most employees who have been seeking jobs at Medtronic are those aged between 31 and 51, with at least two children. These employees constitute 37 percent of the workforce, and who constitute employees who have complained about the low pay rate in terms of poor compensation and benefits packages which are offered at EPC (Randhawa, 2007). For example, the topmost addressed issue is the health plan whereby 6% of the respondents were unhappy with health lifestyle plan at EPC. The qualitative data indicates that most employees wonder why they have to pay $50 an extra month for the 401(k) plan that is for covering healthy lifestyle plan for employees, yet most of them live healthy lifestyles. As such, some employees have been concerned that this extra surcharge bars them from achieving their plan of building a family house.
The second issue that should be addressed is the right market to pay for a position, whereby 10 percent of respondents indicated this issue as being important. Based on the statistics table, this issue has scored the highest percentage relative to all the other problems that were reported by employees. Also, it seems that this issue is linked to other compensation and benefit complaints which have been highlighted by EPC employees. For example, pay rates based on job performance, job-specific and company-sponsored training, and variable pay options variables have received the second highest score rate of 8% for all the complaints which were reported by EPC. From the qualitative data, employees complain that the company deducts $3500 a year yet the tuition reimbursement is low, and they can instead acquire the training by relying on a course book which costs only $1,000. Employees receive no sick time and unpaid time off goes up to 18 days from the day of employment. This figure indicates a complaint from older employees who have suspected that this could be a strategy of getting rid of the less, older workers. Lastly, the issue of variable pay options has attracted many complaints, which include the company having no voluntary pay options, pension plan match, and a good reward system.
Consistent and Prominent Issues
Consistent and prominent issues that should be addressed should be the healthcare plan of EPC. The company offers high deductible for the out-of-pocket health insurance, which employees find it is difficult to save money for retirement and the possibility of having no savings to cover their medical costs (Milkovich, NewMan & Gerhart, 2013). An example is a dentist mother with 2 to more children and wants the best health insurance cover at EPC pays $3,750 bi-weekly premiums for out-of-the-pocket medical cost, $2,000 per person, while earning a salary of $69,000. This amounts to $6,900 monthly deductible, which does not include emergency health plans that can be of interest to her, indicating that she is left with little for saving. Employees are concerned that the contributions they make to the company are underappreciated or not properly rewarded based on basic salary and benefit plans the company offers them (Osman, 2013). This is because of the variable pay options, such that employees must work for six years to get paid offer time of 15 hours, and offers a cheaper course of up to $3500 for training and development.
External Benchmarking data
A key issue presented in the case is that employees do not feel that they have many options of healthcare plan to choose from as compared to Medtronic. For instance, there are no 100% covered plans under the EPC’s 401(k) plan while at Medtronic, the company offers 100% virtual clinic medical plan and 100 % for Medtronic View Mounds Clinic. While the out-of-the-pocket medical plans at EPC amounts to about $6,900 for employees with more than two children, Medtronic offers a cheaper plan for the whole family that amounts to $3,600/family. There is an issue of salary comparison between the two companies where Medtronic offers better salaries packages for different job positions compared to those which are offered at EPC. For instance, scientists working at a domestic location at EPC earn an average salary of $93,000 while at Medtronic, they earn $103,900. Although both companies offer training and development packages, Medtronic’s packages consist of more advanced professional courses than EPC. For example, the EPC offers only a basic course of $3500, while Medtronic has scholarship programs which are provided with a 100% reimbursement fee.
Conclusion
Based on the analysis of EPC, the Total Rewards Director should review the healthcare and variable pay options because these two factors are the reason employees sought employment at Medtronic. The results from the data analysis have shown that the medical coverage plans for EPC’s employees are more expensive than those of Medtronic, especially for the large percentage of employees who have more than two children. Also, Medtronic offers better basic and benefit salary packages as well as additional benefits, which include advanced training and development programs for its employees. Therefore, the two issues of health care plans and salary variable options are the key concerns that EPC should address to solve the problem of the high turnover rate.
References
Milkovich, G., NewMan, J., & Gerhart, B. (2013). Compensation: 11th Edition . New York: McGraw-Hill Higher Education.
Osman, I.H. (2013). Handbook of research on strategic performance management and
measurement using data envelopment analysis . Hershey: IGI Global.
Randhawa, G. (2007). Human Resource Management. New Delhi, India: Atlantic Publishers & Dist.
