In the current business world, compensation is a critical element of competition. Company leadership and management must ensure that the organization has a superior compensation strategy that gives them an edge in talent management and attraction. Like most of the companies today, Blissful CEO is facing a tough decision to change the organization's operations and vision and incorporate changes that favor the millennial population as the baby boomers are quitting full-time jobs. A critical trait of the millennial is their diversity in talents and nature, making it challenging for Human resource managers to manage and satisfy their needs. Part of that challenge is compensation. Managers have to take risks and make significant decisions regarding how to compensate when to pay, and what pay to ensure that they remain fair to all employees. Above all, they still have their goals and organization missions to achieve. Meaning, HR must align what they compensation or their strategy of the payment with both internal and external factors that define their competitiveness within the company.
Internal Consistency, Market Competitiveness, and Employee Contributions
A big decision that Mrs. Smith must make is understanding the nature of the compensation strategy versus the organization's internal structure, competitiveness, and the employees' contribution to get a better way to compensate workers. Note that, without these critical areas, Ms. Smith risks being bias, and this could lead to the organization's downfall while managing a diverse group. While researching how to align its compensation strategy with these factors, there should be an excellent strategy to ensure that the compensation is consistent within the organization ( Hayes, Noseworthy & Farrugia, 2020). Furthermore, Ms. Smith must ensure that the company sets the bar at the same level as its competitors. At the same time, looking at the employees' contribution while designing a compensation package will help to remain bias-less while managing the millennial.
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Job analysis and evaluation should be the approaches Ms. Smith should consider to ensure that the resulting compensation strategy is consistent. Ms. Smith should look at ways of creating a compensation package that is consistent with the skills within the organization. The organization's mission should be another area of research. The organization's mission underlines the status of the organization and the task it looks to accomplish. Ms. Smith needs to understand its organization's purpose, and the best way it can align the compensation approach with the mission ( Fechner, Pachur & Schooler, 2019). In such a case, there are different research approaches and methods it can use to ensure that the compensation strategy it chooses is consistent. The first is the job analysis that entails understanding the nature of the job and designing a compensation strategy that matches each job category. The next is the job evaluation, which involves analyzing the job content and components and developing a compensation strategy that meets all its requirements. It entails understanding the task and making sure that their compensation is consistent regarding every task components.
Regarding the organization's competitiveness, Ms. Smith should look at the competitors' pay structure and surveys. For instance, Smith must assess and do a thorough assignment regarding the compensation strategies its competitors are using in the industry. They should relook the average pay slips and structure and survey the competitors' approaches to compensate their employees ( Hayes, Noseworthy & Farrugia, 2020). These will allow Smith to decide on the average compensation to include for each job category and group. Therefore, the survey will ensure that the organization's compensation strategy for a specific job is within or above those of the competitors in the market. The advantage will have by taking this approach is the fact that it will retain and attract most of the millennial talents.
Regarding the employees' contribution, Smith will have to relook the employees’achievements and performance. The employees’ performance surveys are the right areas to assess to understand the employees’ performance and consistency. These approaches will demand that Smith compensate employees based on their commitments and excellent work. These will include the employees’ performance improvements, innovative nature, and creativity in making the job done ( Larkin, 2019). Therefore, Smith will have to relook its internal structure, culture, and atmospheres to make decisions on the best way to compensate its employees. Other external factors, such as competitors, will also be areas to relook to ensure that the compensation strategy is good for the millennial demography.
The Compensation and Organizational Challenges, and Opportunities
Managing a diverse group of millennial employees will demand that Ms. Smith works smartly to achieve the organization's desire and remain competitive in the market. First, Smith will have to face the compensation challenge that comes with these people. Unlike the Baby boomers that work long hours in exchange with money, the young millennial age does not like toiling as most of their work is based on technology. However, they demand a lot of payment and have more expectations regarding the level of pay than baby boomers. Unlike the Baby boomers also, the millennial population relies mostly on the power of technology. Therefore, understanding their direct contribution to the organization's performance tends to be a big challenge. Thus, rewarding their effort is becoming a big challenge that Smith must be ready to face. However, Smith's opportunity to compensate these types of employees is the fact that they are flexible. These young and diverse groups have a lot of flexibility, which means that they can fit any package to cater to their needs within the environment where they work.
Regarding the organization, the challenges the Smith is likely to face are the incorporation of the new policies strategic compensation policies that will cater to the extra-demand that the millennial population has in the organizations. Unlike the baby boomers, the millennial age groups demand more flexibility and work-life balance. These individuals require more of the freedom to express their talents. They value communication and expect a lot of attention from the company ( Hayes, Noseworthy & Farrugia, 2020). Ms. Smith will have to change the organizational culture and structure as a way to help them adopt. The opportunity that comes with such a workforce is their level of flexibility that can make it easy for the Smith to change the compensation strategy and other organizational strategies that can be good for its company’s productivity.
Also, the demand for a competitive pay wil means that the organization wil have to revise its strategies the goals to cater to such needs. Most of these individuals expect better pay, which means that the company will have to cut the cost to cater to their finances. Also, the organization's mission and values should change, and this is an area that Smith will have to relook to impress and work well with the diverse employees. Other than a better compensation strategy that will be mandatory for Smith, they should look into issues such as its image on the global stage. Organizations will have to have better strategies to manage their environment. It also must have a high level of diversity policies and reduce any form of racial or sexual discrimination. The plans should also encompass the need to be transparent and support the multi-culture thinking that comes alongside this diverse population.
With strategic compensation, the opportunity that will come with the shift is numerous. First, the company will get a chance to revise its compensation structure and adopt a more resilient and competitive compensation. The revised compensation structure is likely to attract more people and employees ( Woo, 2019). Further, the decision to venture into a diverse world by considering diversity as a factor while hiring employees is an opportunity to open up more reformed organizations with a good reputation worldwide. People are currently connected, and employees have the powder in their hands to view the organization's profile. Therefore, they chose those employers that value diversity. Other than that, the shifty means that the organization will revise its employees' relationship polices and create a family-like organization structure that is welcoming to all. Such culture and structure are likely to open more paths for more customers who value diversity in the current organizations. Though the decision will be challenging, incorporating strategic compensation wil open more opportunities for the employees' motivation and thus boost their performance.
The Strategic Compensation Decisions the CEO must make and recommend.
There are two critical decisions regarding strategic compensation that Smith will have to make to ensure that the organization will be ready to make the transition. The first decision is whether the compensation strategy they choose aligns well with the organization's objective and the organization’s HR strategies. In this case, the critical decision is to understand and make a decision on the right compensation plan regarding what the organization requires and the cultural environment it operates. The decision will require that either the organization abandons the best compensation approach that does not match its current culture or change its culture to adopt a new HR strategy that suits the compensation strategy. In this case, the recommendation is to change the culture and look for a better compensation approach that will match the HR new culture and strategy. First, the HR strategies in hiring will change from looking for babyboomers to looking for the millennial employees. The implication is that Smith’s HR team will be seeking more commitments and motivation because these are the nature of the environment that millennials employees are looking for while selecting an employer. Therefore, the compensation approach must align with them to create a welcoming culture for millennial employees. The compensation approach must seek to reward behaviors that uphold the core values and look for performance measures as reward criteria.
Another compensation strategic decision Smith will make concerns a choice and design of the compensation strategy and the support it will have within the company. Smith will have to decide on whether to install a compensation system that has enormous support but is likely to disappoint against a better system that is costly and thus lack support. For any compensation design and strategy, the considering is on financial factors and compensation in the industry. There are excellent compensation packages that look to motivate employees but have low returns to the organizations. Such strategies tend to get less support despite their best approach and competitiveness due to a lack of finance. In this case, the recommendation is to look at and survey the competitors' compensation strategies and their costs. By assessing the competitors' strategies, Smith will understand the average pay for particular jobs. It will allow Smith to make an informed decision regarding the best compensation design to choose to remain competitive.
In summary, Smith will need to change the organizational culture to adopt a new compensation approach that will be flexible and versatile to cater to diverse workers' needs. While looking for a better environment for the new employees, the company targets, having in place an excellent compensation package that motivates the millennial population will be a boot to increase organizational performance and image.
References
Fechner, H. B., Pachur, T., & Schooler, L. J. (2019). How does aging impact decision making? The contribution of cognitive decline and strategic compensation revealed in a cognitive architecture —Journal of experimental psychology: learning, memory, and cognition , 45 (9), 1634.
Hayes, S. N., Noseworthy, J. H., & Farrugia, G. (2020, January). A structured compensation plan results in equitable physician compensation: a single-center analysis. In Mayo Clinic Proceedings (Vol. 95, No. 1, pp. 35-43). Elsevier.
Larkin, I. (2019). Strategic compensation: a critique and research agenda. In Handbook of Research on Strategic Human Capital Resources . Edward Elgar Publishing.
Woo, H. (2019). The effect of CEO compensation structure on the early internationalization of newly public firms. The International Journal of Human Resource Management , 30 (12), 1977-1996.
