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Remuneration And Benefit Strategy

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1.External Factors that Impact Remuneration and Benefit Strategy.

2. Devise a New Remuneration and Benefits Structure for the Position of Retail Store Manager within the Organisation .

3.Prepare a Briefing Paper to provide Information about the Incentive Plan of your Proposition.


1.Three External Factors that Impact Remuneration and Benefit Strategy

Remuneration and benefits are both monetary and non-monetary rewards that are provided to the employees for their performance in an organization. According to Noe et al., (2014), there are several internal and external factors that affect employee compensation. Three major external factors are Inflation rate, Cost of Living and Labor Unions.

Inflation: Inflation means increase in the prices of commodities and decrease in value of the money. As a result of inflation, several things get affected which are raising prices, fall in the value of currency in foreign market, increased amount of tax by government and stagnation in the enlargement of economy (Gupta & Shaw, 2014). Inflation also affects remuneration and benefit strategy. For example, in the year of 2012, due to inflation, Indian companies increased salary of the employees up to 12% to 27% than the previous year.

Cost of Living: The index of cost of living also influences remuneration and benefit strategy of an organization (Noe et al., 2014). If general price level and consumer price level index increases or decreases, the wage, salary and compensation strategy will change accordingly.

Labor Unions: If labor union of an organization is powerful, then it will influence remuneration and benefit strategy of that organization. Labor unions are established in the case, where demand is high and amount of labor supply is low. In these situations, employees can demand for more money. On the other hand, non-unionized organizations enjoy more amount of freedom with respect to the fixation of the compensation plan.

Three types of Incentive Program

Employee recognition: In a survey conducted by Michael C. Fina Recognition, nearly 300 human resource professionals confirmed that workers exceedingly value office gratitude programs that actually charge very little to execute. Nearly three quarters of the participants also said that their organizations are seriously thinking to develop their recognition programs inside the next year. As mentioned by Mone and London, (2014), some most dominant recognition initiatives are performance awards (33 percent), service-anniversary awards (20 percent) and e-cards (10 percent).

Small financial incentives: According to the reports of America’s 2015 place of work reimbursement Report, nearly 70 percent employers stated that incentives are useful for their organization. However, it is also true that only few employees actually offer or consider offering solutions that provides benefits to the employees financially (Gomez-Mejia et al., 2014). According to that same report, the most famous financial incentives are gift cards or bonuses (29 percent), a point curriculum for discounts or cash (14 percent), discounts in terms of health indemnity and other goods (11 percent) and raffles (11 percent).


Worker Perk Program: Recently an employee-verification organization named as SheerID conducted a survey for Google. The survey was done with more than 500 respondents and the topic was worker reduction practice inside companies. As per the results, it was found that only 20 percent of employees use their worker price cut program. However, if those programs were easy to avail, 46 percent employees would utilize them regularly. According to (Bloom & Trahan, 2016), some popular employee discounts that most of the organizations use are entertainment or travel (65 percent), Restaurants (55 percent), Computer or electronics products (50 percent), subscriptions (39 percent), health or beauty products (29 percent) and office supplies (21 percent) (Huang et al., 2016).

Key Considerations while Developing Remuneration and benefit Strategy

Budget Allocation

Remuneration and benefit strategy must include company’s approach to assign recompense dollars into income and reimbursement. The organization will also have to decide how much recompense financial plan will be spent on wages and how much percentage will be spent on reimbursement and additional incentive programs.

Establishing Salary Ranges

Establishing salary ranges in extremely serious to make sure that worker pay is spirited with other orgaizations. According to Sparer and Dennerlein (2013), to become spirited, it is paramount to benchmark jobs inside the similar business and develop a pay configuration. Ranges for salary can be established within by executing investigation or using sites like and It will conclude standard wages in a scrupulous region.

Salary Audits

As the market alters regularly, it is significant to perform standard income audits to make sure that wages ranges reflect latest recompense trends in an business.


Benefit Package

Number companies are nowadays using benefit packages with the salary to attract new employees and retain existing ones (O'connor & Klein, 2013). Therefore, proper health, retirement, tuition reimbursement along with other benefits will motivate current employees to stay with the organization.

Performance Management System

Performance management systems such as development of yearly goals and yearly performance appraisals can be included to make sure employees are meeting objectives of the organization (Campbell et al., 2012).

Legal Compliance

A proper compensation strategy will integrate legal requirements to make sure that the company is in compliance with all federal laws and state laws.

Structured Administration

It is important to establish annual review method and raise method timeline to make sure all the areas are properly managed and compensation management is a success (Cristiani & Peiró, 2015).

Industrial Agreement

All working Australians are covered by industrial or enterprise agreement. On July 1, 2009, several types of combined and personage administrative center agreements under the preceding office relation systems were replaced by a single kind of conformity that is enterprise agreement (Davila & Elvira 2015).


After conducting a proper market research, it seems that the best remuneration and benefit strategy for our organization would be commissions, under the method “small financial benefits” plan. It is already mentioned that according to America’s Workplace Benefit Report, 70 percent employers have stated that financial incentives are working good for their organizations. Now in retail sector, in which our organization operates, the most important department is sales department (Davila et al., 2015). Employees of this department not only sales products but also communicate with the customers. As they directly communicate with the customers, they are responsible for developing good relationship with them. It will help or organization to attract new customers and improve profitability. For salespersons of our organization, commission would be the best idea.


The primary reason behind selecting commission is it is the most common and conventional way to encourage and reward salespersons for closing big deals or meeting organizational objectives. Another chief advantage of this system is it provides major incentives to salespersons and therefore; they work harder on behalf of the company. This system will be divided into different tiers. The lowest tier will offer them smaller amount of profit for making few sales (Jiang et al., 2012). However, they will receive higher amount as commission if they can make additional sale in a particular time frame. Currently, our organization can offer 5 percent commission to the employees for selling 150 products in a month. However, if they can sell additional products, then they will gain bonus 10 percent commission. It is expected that this method will boost the performance of our sales personnel (Morley et al., 2016). Therefore, this method is recommended as the new remuneration and benefit strategy for our company.


For getting success, organization needs to attract as well as retain productive employees. A competitive incentive plan helps the organization to accomplish these objectives. Incentive plans help to motivate employees for exceeding expectations and business growth. These kinds of plan help to promote employee’s exceptional behavior during a specific period. Besides, these kind of business plans can also attract potential employees towards the organization along with encouraging the company loyalty (Ribeiro & Gomes, 2016). Nevertheless, incentive plans must consist of obtainable goals, which will hold employee morale, contributing towards successful plan. Every organization needs to implement incentive plan for empowering their staffs to perform better and achieve their performance goals, thereby achieving the overall goal of the organization or the business. There are several levels of incentive plans. For instance, incentive plan for low level employees would include people at bottom of the organization and first line supervisors.

The most common forms of Incentive Offerings in Organizations

Small Financial Incentives (what is it?) (Strengths)

Small financial incentives mean providing extra amount of money to the employees along with their regular salary for exceptional performance. Generally when employees over perform their duties or goals, then the organization provides such incentives to motivate them. This system’s advantages are its biggest strengths (Singh et al., 2013). This system not only helps to motivate employees, but also allows an organization to gain employee loyalty. Besides, it makes sure that an employee is satisfied with his job that in turn reduced employee turnover.

Employee Perk Program: (what is it?) (Strengths)

Employee perk programs help to attract employees, these programs does not contribute to the development of organizational culture, rather, these programs are additive and improve employee morale, thereby enhancing the chance of their retention in the organization. There are different kinds of perk programs, but the organization need to choose the appropriate one for implementing in the workplace. They need to focus on the perks, which are important for employees and culture (Tarique et al., 2015). The common perk programs include profit sharing, unlimited PTO, extra time off during holidays, gym and spa memberships, maternity and paternity leave more than suggested period by law, off site events, weekly entertainments, education subsidizing, provision of technological support (i.e. mobile, tablet, laptop), sports pass, community membership, club membership, medical insurance and free food.

Employee Recognition: (what is it?) (Strengths)

Employee recognition is referred to the acknowledgement of the effort of a team or an individual, who has been supported the organizational goals and values. It is one of the key non-monitory tools for employee retention. Recognizing the right person would motivate the recognized employee to perform according to the higher level needs, whereas, employees who do not receive the recognition would also be influenced to perform better to gain the recognition in future (Varma & Budhwar, 2013). It is important for several reasons, for instance, to improve employee morale, to enhance their loyalty, to make employees aware of their work for which they are valued, to increase employee motivation and retention as well as to help in building a supportive work environment. Organizations need to be a common practice in workplace and should not include any kind of discrimination or bias in selection. Effective employee recognition can be for both individual and group level, in either formal or informal manner. In this context, the formal initiative can be done on a yearly basis, whereas informal recognition can take place, when it is merited by the supervisor (Wood et al., 2014). However, the formal and informal recognition should be distinguished on the basis of employee’s status and organizational needs. Informal recognition can be provided at any time, for empowering the employee, which does not need formal documentation.


Explanation for Choosing Commission

Among several financial incentives, commission process is selected. There are several advantages of this method and that is why; this method is selected over others. Those advantages are hereby mentioned below.

It helps to motivate the salespersons to deliver high performances. If salespersons are only provided direct salary, most of them will have limited motivation to exceed basic expectations. However, if opportunity of earning through commission is provided, it will drive the sales persons to set more aggressive goals to work through issues and rejections. They will continuously seek new opportunities.

Thought a direct salary provides the steadiest income for workers, sales staffs who have worked on direct commission frequently welcome a higher level of definite profits and base pay. The steadiness of stability and incentive to execute at an elevated level has a nice balance of reimbursement from both direct wage and direct commission (Morley et al., 2016). The explanation is to present just adequate permanence that employees feel fulfilled with their basic monetary sanctuary but still have enthusiasm to sell more to be paid more.

Salespersons, in order to sale more products to gain commission will also develop positive relation with the consumers. It is another vital thing for business. Positive consumer relationship not only develops a base of loyal consumers, but also helps to attract new consumers (Davila & Elvira, 2015). Loyal consumers will automatically ask their friends and families to buy from the organization where they are getting welcomed by amicable salespersons.

However, there is one disadvantage of this method. It is possible that salespersons will mislead the consumers to make sales. It will hamper the brand image of the organization. Therefore, proper monitoring is required. It will indicate that salespersons are using proper ways to make more sales.



Bloom, D. E., & Trahan, J. T. (2016). Flexible benefits and employee choice: Highlights of the literature. Elsevier.

Campbell, BA, Coff, R & Kryscynski, D (2012), 'Rethinking sustained competitive advantage from human capital', Academy of Management Review, vol, 37, no. 3. pp. 376-95.

Cristiani, A. & Peiró, J.M., (2015). Human resource function strategic role & trade unions: exploring their impact on human resource management practices in Uruguayan firms. The International Journal of Human Resource Management, 26(3), pp.381-400.

Davila, A. & Elvira, M.M., (2015). 17. Human resource management in a kinship society: the case of Latin America. H&book of Human Resource Management in Emerging Markets, p.372.

Davila, A., Foster, G. & Jia, N., (2015). The valuation of management control systems in start-up companies: International field-based evidence. European Accounting Review, 24(2), pp.207-239.

Gomez-Mejia, L. R., Berrone, P., & Franco-Santos, M. (2014). Compensation and organizational performance: Theory, research, and practice. Routledge.

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Huang, H., Mattke, S., Batorsky, B., Miles, J., Liu, H., & Taylor, E. (2016). Incentives, program configuration, and employee uptake of workplace wellness programs. Journal of Occupational and Environmental Medicine, 58(1), 30-34.

Jiang, K, Lepak, DP, Han, K, Hong, Y, Kim, A & Winkler, AL (2012), 'Clarifying the construct of human resource systems: Relating human resource management to employee performance,' Human Resource Management Review, vol. 22, pp.73-85.

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