The paper "Designing an Effective Compensation System" is a great example of a Management Case Study. The compensation system plays a critical role in the management of human resources in any organization. Employees are the most important assets in an organization. They need to be motivated and rewarded accordingly in order to perform optimally. If an organization has poor reward schemes; it might not achieve its strategic goals and objectives in the long run. An evaluation of Marshall & Gordon’ s current compensation system. Marshall & Gordon Company is committed to pursuing a diversification strategy that will enhance the services offered by the company.
The traditional PR environment has witnessed a big switch from the normal way of operations. Marshall & Gordon intends to incorporate an Executive Positioning Practice-EPP program in its operations. The main objective of the new strategy is to boost the new company's strategic objective and attract more clients to the EPP program. However, the company is faced with a multitude of challenges in its endeavor. The performance management tools used for EPP programs are the old PR tools, and the reward system is also the same despite EPP execution is very different from PR.
There are no guidelines on how the fees splitting and reconciliation should be made. There are Inherent challenges in developing a compensation system that addresses the two sides of the businesses. The current environment is challenging, the company employees need to be motivated in order to support the new strategic objective of the EPP program. The new compensation system may have a negative impact on the top performers who are comfortable in the current environment. All they need is their bonuses when they deliver revenues.
The worst scenario is that all the consultants below the level of principal and nonconsulting staff are paid salaries only. Reward for performance by practice Directors is arbitrary, and there is no clear cut formula to execute the rewards. There are no parameters to support 10% reward for performance. Consultants have all along been complaining about the metrics used to reward the performance. This has to be addressed if meaningful performance is to be realized. Significance intervention increase job performance, (Grant 2008).
For instance, production below the consultant’ s salary, the performance was not rewarded. The tiered compensation system is flawed. Consultants also write bonus cheques to their associates and assistants from their bonuses, this is an open window for favoritism. There also exists a conflict of splitting the O/E fees. Partners get compensation on both transactions regardless of whether the execution was handled by another partner. Any project carried out by two partners, negotiate of the bonus had to be agreed between the two. Practice Directors have the discretion to award top performing consultants even if their behaviors are not aligned with the company objectives.
Research has shown that behavior mediates the relationship between commitment and performance (Elorza et. al., 2011). The company has recently embarked on mitigation measures to support this strategy. The development of new performance management tools and a solid compensation system is underway. Despite this bold step, there exists Skepticism about the new initiative in general. In addition, It is difficult for the company to get consultants in mentoring and training. When a formal mentoring was proposed by the company earlier, consultants were apprehensive that their fees will be cut to their juniors and also the notion that by engaging in EPP, they will be doing nonclient related tasks.
The current system encourages entrepreneurs without teamwork, there is no collaboration, a case example of the response by Bitch about the failed EPP pitch in China, there is a clear indication of individual fiefdoms among the partners. He also confirms that the small PR team he was aware of in Beijing was not committed to the EPP program.
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