Strategic Perspectives to Compensation

  • Uncategorized

StrategicPerspectives to Compensation

Strategicperspectives to Compensation

Thebusiness world has evolved significantly over the years, and, today,the marketplace is filled up with numerous products and services thatare similar. Therefore, to attract and retain customers companieshave to regularly and consistently find ways of differentiating theirproducts and services so that they can have a competitive edge overthe rivals and be successful. Similarly, organizations have to ensurethat they are in a position to attract and retain the best talentsavailable in the market place. Employees are the crucial cog thatkeeps the organizational activities running smoothly, and, hence, itis imperative for companies to have top notch compensation packagesto ensure that the best talents will always be attracted to them.


Thecompensation procedures for ARISE do not provide a competitiveadvantage for the organization. Although the company offers basicsalaries, insurance covers, and a horde of other benefits andincentives, the compensation is not comprehensive making it nodifferent from that of other average companies. A competitivecompensation plan keeps expenses at a minimum, differentiates theorganization from other enterprises in the job market, and makesemployees satisfied. However, the over-reliance on uncertain tipsfrom customers as part of the compensation package has led toincreased dissatisfaction on the part of the employees since actualtips have been way below the projected margins. The job looked veryattractive to many applicants due to the promise of lucrative tipsbut the fact that tips were running low made the staff feel likethere has been a breach of the mutual commitments contract (Beer &ampClaire, 2012). As a result, turnover rates for the organization,albeit below the industry average, have been on a steadily risingtrajectory.


Thereare various ways through which the strategic compensation decisionsfor ARISE could be improved. First and foremost, the company needs toremove earnings from tips as one of the main elements of thecompensation plan, and, instead, replace it with something moreconcrete such as salary rise. Also, instead of merely encouraging theemployees to get additional training on complementary wellnessservices, the organization needs to show that it is committed tocontinuous development of the staff by establishing their in-housetraining programs or partnering with entities that provide suchtraining services so employees can access them at lower costs. Thiswill make the staff members feel more valued by their employer and soderive utmost satisfaction from the compensation plan.


Theall-star team approach was, and still is, a creative and innovativestrategic approach to enhance the quality and efficiency of servicedelivery. Besides, employees have welcomed the approach and areloving working in teams as it promotes the development of healthyinformal work relationships and forms a base that discourages slackoff activities. So far, the approach has only increased customersatisfaction levels, and no connections have been made betweenincreased turnover and dissatisfaction levels with inefficiencies inthe all-star approach. Therefore, I would only recommend that theorganization continues to keep faith with the approach since it isworking properly. Only minor strengthening need to be done. However,the benefits plan needs a major overhaul through injections of freshand relevant components. On this front, I would recommend:

  1. Launching a comprehensive review of the monthly and hourly salary and wages rate to adjust the pay upwards. The review process should be done in consultation with the employees to ensure that the new compensation will reflect their expectations.

  2. Make the benefits plan more comprehensive through the introduction of new elements such as retirement benefits, wellness programs, on-site training, flexible working schedules, employee assistance programs, paid time off, educational reimbursements, group life benefits, and raises and bonuses.

Althoughdeveloping such a comprehensive benefits plan is costly, the ultimateand intrinsic benefits that will be derived from improved employeesatisfaction, as a result, would outweigh any such costs. AsThompson notes that although the expenses of hiring and compensationmight hurt the bottom line, failing to change the overwhelmingfeelings of being undervalued among the employees could lead todownfall of the organization (beer &amp Clair)


Beer,M., &amp Clair, L. (2012). ARISE: A Destination for a Day Spa.HarvardBusiness School,913-521.

Close Menu