The paper "Designing Compensation Systems" is an excellent example of a Business case study. Marshall & Gordon is a leading public relations firm. It provides a wide range of services intended for managing, protecting, and enhancing a client’ s reputation, brands, and product. Traditionally, Marshall & Gordon has been a market leader in the international market. However, the firm was hard hit by the economic recession that took place in 2008-2009. Furthermore, Marshall & Gordon lost part of its customers due to high competitors in the market. Marshall & Gordon target the international market. The company has developed various products so that they can be different from its competitors.
Currently, the company is committed to pursuing a strategy that adds executive positioning to traditional public relations services. However, its current compensation system is not strong enough to support the new strategy. The company has been facing financial problems that were caused by poor performance. The CEO and her directors had dropped bonuses because they could not offer them. Employees, especially high ranked employees, were worried about their bonuses and other benefits they normally receive.
The industry’ s management was not able to pay all the benefits as it uses to be because of the economic downturn that had hit Marshall & Gordon. A dropped in revenues by 40% was reported forcing the industry to cut costs by laying off some of its employees. The situation was challenging and the CEO, Kelly Browne, had no option other than to cut down the industry’ s expenses by suspending consultant salaries by 5% and all other matching funds that are provided for the employees as a retirement benefit. This strategy of reducing expenses is risky because it does not only support the company’ s new strategy but risk core client-service activities.
This compensation system does not work in a competitive environment. It does not support new strategies, in fact, it can cost the company. The compensation system of Marshall & Gordon does not support the implementation of executive positioning to the traditional public relations services because of the following reasons. First, the system is very discouraging. Employees are likely to walk if they fail to receive a certain level of bonus they expect to receive.
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