Case Study Lowe's
Lowe’s battles several compensation and benefit issues, which are not unique to the company. The issues include external competitiveness, internal equity, executive compensation, and employee recognition (McDonnell, n.d.).
Lowe’s HR staff is in a continuous battle to determine competitive compensation rates for employees in order to attract and retain high quality staff. At Lowe’s, attracting IT employees continues to be struggle, especially since competitive IT compensation rates often fall outside established company salary ranges. Equally, finding a balance within the company continues to be an HR challenge. Some industry recognized ‘hot skills’ in IT demand compensation that often exceed the salary ranges of the managers they report
to. That violates the company’s job families pay structure and results in a unfilled critical IT jobs.
Like many public companies, the Lowe’s executive compensation and benefits are subject to severe critique by the media, shareholders, and company employees. The largest critique stems from the company’s lack-luster performance against its primary competitor, Home Depot. Lowe’s financial performance has lagged behind Home Depot’s for nineteen straight quarters. In spite of continued lagging performance, the Lowe’s CEO saw a 54% increase in total compensation in 2014, while company employees received an average 3% merit increase (Lowe’s Companies Inc., 2014).
The Lowe’s performance management system was implemented to recognize performance and reward employee performance as part of the company’s pay-for-performance strategy. However, the performance management system lacks consistency in the application of employee performance ratings and manager ratings are not subject to audits. That leads to inconsistencies in the determination of performance ratings and leads to inequalities in employee rewards and recognition throughout the organization.
Lowe’s HR staff is in a continuous battle to determine competitive compensation rates for employees in order to attract and retain high quality staff. At Lowe’s, attracting IT employees continues to be struggle, especially since competitive IT compensation rates often fall outside established company salary ranges. Equally, finding a balance within the company continues to be an HR challenge. Some industry recognized ‘hot skills’ in IT demand compensation that often exceed the salary ranges of the managers they report
to. That violates the company’s job families pay structure and results in a unfilled critical IT jobs.
Like many public companies, the Lowe’s executive compensation and benefits are subject to severe critique by the media, shareholders, and company employees. The largest critique stems from the company’s lack-luster performance against its primary competitor, Home Depot. Lowe’s financial performance has lagged behind Home Depot’s for nineteen straight quarters. In spite of continued lagging performance, the Lowe’s CEO saw a 54% increase in total compensation in 2014, while company employees received an average 3% merit increase (Lowe’s Companies Inc., 2014).
The Lowe’s performance management system was implemented to recognize performance and reward employee performance as part of the company’s pay-for-performance strategy. However, the performance management system lacks consistency in the application of employee performance ratings and manager ratings are not subject to audits. That leads to inconsistencies in the determination of performance ratings and leads to inequalities in employee rewards and recognition throughout the organization.