Hrm 531 Compensation Plan Paper

Compensation Plan
Teresa San Nicolas
HRM 531 – Human Capital Management
January 31, 2011
Janis White

InterClean has merged with EnviroTech in order to evolve with the industry and providing not only cleaning products, but also solutions and services. This merger is an opportunity for InterClean to reposition itself and expand their understanding of the marketplace, customer’s needs, and to break through into new markets. The company’s goal is to provide a full spectrum of cleaning services and solutions that will become our major avenue for sales. In order to do that the focus needs to be on attracting, retaining and motivating the best talent, which can be done by establishing a superior training plan and offering competitive benefits and compensation packages.
Pay System
In order to control costs InterClean’s pay system should channel more dollars into incentive awards rather than fixed salaries. “Such variable-pay systems almost guarantee cost control” (Cascio, p. 417). The pay system for employees will be a pay-for-performance theme with bonus payouts. Not only will this pay plan keep costs lower than other pay plans, but it will also help to encourage healthy competition among employees and increase productivity. “Almost a third of American workers whose pay is not tied in some way to their performance
believe they would be more productive if they had a greater interest in the companies that employ them through benefits such as profit sharing, according to a survey from temporary staffing and outsourcing firm Kelly Services. (Miller, p. 1)”
Three Components of the Reward Package Compensation packages include both financial and nonfinancial rewards.
The base pay with the bonus payouts would cover the financial rewards. “Nonfinancial rewards include everything in a work environment that enhances a worker’s sense of self-respect and esteem by others (e.g., work environments that are physically, socially, and mentally healthy; opportunities for training and personal development; effective supervision; recognition) (Cascio, p. 418).” The nonfinancial benefits that will be offered to motivate employees to reach peak performance are a wellness plan (including gym membership), on-site dependent care and flex
time. A wellness plan plays an important role into keeping health care expenses down and decreasing the amount of sick leave taken. “Studies have found that employees that take care of themselves live longer and don’t become sick as easily as their un-fit co-workers. When a company has a healthy staff, they are more productive and their appearance presents a positive image to the consumers (Unknown, p. 1).” InterClean can encourage employees to use gym membership by allowing extra time during their lunch hour for employees to exercise and have enough time to shower, change and get back to the office. Dependent care on-site will decrease employee absences and increase productivity and morale. “Data from national random sample indicate that providing family benefits promotes a dedicated, loyal workforce among people who benefit directly from the policies, as well as those who do not (Cascio, p. 381).” When a company had loyal and dedicated employees they will have a lower turnover rate, which in the long run will save large amounts of money. “A study done by Cynthia Ransom and Sandra Burud at the Union Bank in Pasadena, California showed that the bank saved between $138,000 and $232,000 annually in operations due to a reduction in turnover and absenteeism from their on-site daycare program. (Murdock, p. 1)” Flex time

References: 1. Unknown, 2010. Gym Memberships as Part of Your Wellness Program. http://www.businessknowledgesource.com/health/gym_memberships_as_part_of_your_wellness_program_028931.html

2. Murdock, K. Februrary 13, 2006. On-Site Childcare. http://www.allbusiness.com/specialty-businesses/women-owned-businesses/3877370-1.html

3.