Factors Affecting Strategy Recommendations In Organizational Structure Design

Using the concepts in your textbook, analyze “Multi-Products Corporation” (page 481-482) of Appendix in Strategic Compensation in Canada, 6th Edition and prepare a recommendation that includes responses to each of the following:

1.Using your own words, briefly outline the background – presentation in bullet form is acceptable. Explain the managerial strategy that you recommend be adopted by this organization and elaborate on each of the five contextual variables that influenced your recommendation. 

2.Recommend how structural variables should be implemented into the organization to drive consistency with the managerial strategy that you recommended. One variable is the reward system. Elaborate on the different parts of the reward system you have recommended and discuss the pros and cons of each part. 2

3.Identify the employee behaviour that “Multi-Products Corporation” should seek and recommend how to generate this behaviour in the workforce.

4.Explain how base pay should be offered as one element of the compensation mix for production staff. Support your recommendation with three reasons. 

5.Recommend an organizational performance pay plan for “Multi-Products Corporation”. Describe two key elements of this plan. 

6.Recommend one loyalty and one social reward for “Multi-Products Corporation”. Support your recommendation with two reasons for each reward. 

7.Using the five-step compensation strategy formulation process (Figure 6.1), Page 189, formulate a strategy. Briefly describe your rational for each step.

8. Identify the indirect pay plan that you would recommend for this organization. Justify each of the benefit offerings.

Contextual Variables Impacting Organizational Structure Design

The requirement in the given case scenario is to design an organizational structure (Long & Singh, 2006). The five contextual variables that affect the recommendation for strategy designing of organization includes:

Work specialization - Firstly to form the corporation, it is important to divide the responsibilities according to expertise or field-requirement level. This refers to forming various subdivision in which specific personal with requisite competencies will be functioning. For example, the first line employees will be working on designing of company and their manufacturing, the second line will be involved in assembling, quality assurance, and testing. Down the line, the next subdivision will be involved in marketing and promotion of the product.

Compartment and multi-divisional arrangement - This refers to grouping the organization hierarchy. The subordinates will be reporting to higher authority, where is the decision makers will be placed in top divisional position. Common example can be found in any organization which include CEO, operational officer, financial Manager, HR department, and respective employees (Felin, Foss & Ployhart, 2015).

Chain of command - The corresponding managers will be assigned the responsibility of job sharing and execution of product batches. ‏Managers and higher authority will be responsible for flow of information and communication across the hierarchy system.

Span of control - The managers will be responsible for monitoring and supervising the routine tasks. Job evaluation, market analysis, compensation survey, performance Management and appraisal, and pay plans of employees will be governed according to the span of control with immediate or divisional heads.

Formalization of compensation strategy - Since the product is strong and stable in the market, competitive pay scale will be provided to employees. Likewise, performance appraisal and additional benefits scheme (like profit sharing and reward system) will be implemented to determine pay structure according to employees’ contribution to achieve the targets (Albers, Wohlgezogen & Zajac, 2016). This will act as competitive motivator for the employees and motivate them to retain the market image of “Multi-Products Corporation”.

The structural variables to drive consistency include, competitive pay scale, using performance appraisal system to promote contribution, profit sharing scheme, and reward system. In this section, the discussion with be on these variables which also include the pros and cons, associated within.

Competitive pay-scale - This will include a base pay and reward system in the pay mix. The objective here is to motivate the concerned employees with reference to their responsibility attainment and corporation needs. The cons is that employee might expect continuous growth in the pay scale every year (Massingham & Tam, 2015).

Structural Variables Driving Consistency

Performance appraisal - This variable will motivate employees for continuous engagement into the organisational practice, contribute efficiently and maximally according to the capabilities, and manage the work execution according to the situational needs. The appraisal will motivate employees and help them in attaining job satisfaction. The cons is that hierarchy system in the organisation can affect the appraisal system, in which personal referral or negotiation conflict can affect the appraisal (Lopez, Bornay & Diaz, 2017).

Profit sharing - This variable will be implemented at both individual level as well as team level, according to the performance. The profit sharing strategy will be offered in the form of bonus and commission and will help them in achieving value return for their contributory efforts. Note that the profit sharing scheme will not be combined with the base pay. The cons is that employees can expect bonus on good occasions such as festival, New Year, or according to varying market situation.

Reward system - This variable will be made effective in form of loyalty reward, social reward, as well as on the basis of performativity and contributory role in the organizational achievements. The pros is that it will motivate employee for raising competency and contribute effectively. However, the cons is that employee might develop competition among themselves (Khan, Soundararajan, Wood & Ahammad, 2017).

The desired employee behaviour in this case is to “continue for contribution” to the organizational objective, mainly in terms of productivity; and reflecting morale of being satisfied with job. In this conjunction, the employees will be provided required resources as well as the policy measure to implement competitive pay-scale. Likewise, another desirable behaviour is retention of employees for longer duration, which will also be effectively managed by pay scheme and additional measures like reward system and benefit (De Gieter & Hofmans, 2015). Importantly, it is also important that employees should be able to maintain public perception, such as product quality and uniqueness as golf club. Effective organizational culture and motivational strategies will be implemented such that these professional behaviour can be encouraged among the employees.

First recommendation is that production staff must be offered competitive pay package with reference to market value. This will attract competent employees and will help them in retaining for a longer duration. In addition to this, the employee will also be motivated for the assigned responsibilities (Anokhin, Peck & Wincent, 2016). The next recommendation is that base pay should be easy in the compensation mix, for example 80/20 (80 base pay and 20 incentive). The simple form of compensation mix will motivate employees to implement change in procedure as well as to support the product decision plans. Last recommendation in this regard is that the base pay for employees will be increased according to their experience, competency gains, and promotion. This strategy will be effective for long term retention of the employee in this corporation.

Desired Employee Behaviours

The recommended pay plan will be based on performance, in which the base pay will constitute from 80% (for production team) to 50% (for sales team). The remaining performance will be mutually based on contribution and level of performance. Furthermore, at individual level, merit plan will be added to base whereas commissions and bonuses will not be added to base pay (Kuvaas, Buch, Gagné, Dysvik & Forest, 2016). Likewise, for particular group (production, marketing, sales, and administration) small group incentives will be added to base, whereas profit sharing bonuses will not be added to the base pay.

Loyalty reward in the corporation should be based on the performance. This strategy include tracking of the employee performance in their respective department, which in turn ensures the accountability. The program thus helps in identifying potential contributor to the organisation and can use this tracking system to reward the top performers. The probable benefits from this implementation will be (i) motivational strategy to create recognition for employee which will give them job satisfaction; and (ii) other employees can be provided extra training and competency improvement program (Linz, Good, & Busch, 2015).  

Social reward strategy should include declaration for the “employee of the month” which will be based on individual performance, strategic and innovative ideas, and their contribution towards achievement of organisational objective. This will be beneficial for the employee, as it can avail the opportunity to receive social acknowledgement from the team, in which they are the part (Razmerita, Kirchner & Nielsen, 2016). Especially, in the present word, where feedback and social recognition is the desire of every individual, this strategy will prove effective to motivate employee, magnify their capabilities, and encourage them to contribute for the organization. Further such reward can be converted into pay benefits with reward pay system.

The five-step compensation strategy formulation process will be implemented in the corporation as (Long & Singh, 2006):

Define the required behaviour - Required behaviour will include scope of following procedure of working, implementing change, meeting the targets, and maintaining positive organizational environment.

Define the role of compensation - The compensation will be structured to attract employee with competitive scheme and retaining them for longer duration. In addition to this, it will also act as motivator to encourage employee for contributing maximum according to their competencies for the overall growth of corporation (Chong & Law, 2016).

Determine the compensation mix - Compensation mix will be 80/20 for production staff, 70/30 for operational and strategic team, 60/40 for the administrative and research staff, and 50/50 for the marketing and sales division. The mentioned compensation mix is structures according to “base pay/additional reward pay” style. In addition to this, the bonus, commission, and profitable share will also be included in the total pay, however, they will not be combined with the base pay.

Recommendations for Compensation Strategy Formulation

Determine the compensation level - The level of compensation will be based on criteria such as experience, promotion, and contribution towards achievement of organizational objectives.

Evaluate the proposed strategy - The proposed strategy is framed to be competitive, such that employee can be attracted and they can be retained for a longer duration. More importantly, the compensation mix is structured to encourage people for contribution as well as to help them in achieving job satisfaction.

Performance based bonus or commissions will be considered as indirect pay plan for this corporation. This will be determined for employees in conjunction to reward incentive for the individual performance, or for motivating them to work together to achieve the objectives. It should be noted that the recommended system will not only be applicable for marginal employees, but to all the members of this corporation to ensure fair rule as well as to keep the pay system competitive in the industry (Gerhart, 2017). The benefit measure of this recommendation can be evaluated on the basis of overall improvement in performance, reducing absenteeism, accelerating the production, as well as to manage motivated employee engagement.

References

Albers, S., Wohlgezogen, F., & Zajac, E. J. (2016). Strategic alliance structures: An organization design perspective. Journal of Management, 42(3), 582-614.

Anokhin, S., Peck, S., & Wincent, J. (2016). Corporate venture capital: The role of governance factors. Journal of Business Research, 69(11), 4744-4749.

Chong, V. K., & Law, M. B. (2016). The effect of a budget-based incentive compensation scheme on job performance: The mediating role of trust-in-supervisor and organizational commitment. Journal of Accounting & Organizational Change, 12(4), 590-613.

De Gieter, S., & Hofmans, J. (2015). How reward satisfaction affects employees’ turnover intentions and performance: an individual differences approach. Human Resource Management Journal, 25(2), 200-216.

Felin, T., Foss, N. J., & Ployhart, R. E. (2015). The microfoundations movement in strategy and organization theory. The Academy of Management Annals, 9(1), 575-632.

Gerhart, B. (2017). Incentives and pay for performance in the workplace. In Advances in Motivation Science (Vol. 4, pp. 91-140). Elsevier.

Khan, Z., Soundararajan, V., Wood, G., & Ahammad, M. F. (2017). Employee emotional resilience during post-merger integration across national boundaries: Rewards and the mediating role of fairness norms. Journal of World Business.

Kuvaas, B., Buch, R., Gagné, M., Dysvik, A., & Forest, J. (2016). Do you get what you pay for? Sales incentives and implications for motivation and changes in turnover intention and work effort. Motivation and Emotion, 40(5), 667-680.

Linz, S., Good, L. K., & Busch, M. (2015). Promoting worker loyalty: an empirical analysis. International Journal of Manpower, 36(2), 169-191.

Long, R. J., & Singh, P. (2006). Strategic compensation in Canada. Thomson/Nelson.

Lopez, C. A., Bornay, B. M., & Diaz, F. M. (2017). Leadership and dynamic capabilities: the role of HR systems. Personnel Review, 46(2), 255-276.

Massingham, P. R., & Tam, L. (2015). The relationship between human capital, value creation and employee reward. Journal of intellectual capital, 16(2), 390-418.

Razmerita, L., Kirchner, K., & Nielsen, P. (2016). What factors influence knowledge sharing in organizations? A social dilemma perspective of social media communication. Journal of Knowledge Management, 20(6), 1225-1246.