Compensation Strategy Essay | College Homework Help

A compensation strategy is a process that entails a company laying out plans to determine the benefits while remunerating the members of staff. The program is aligned with its goals and objectives and the managers’ intended achievements in the market. The strategy fortifies the company’s structure in the development of the right decisions within the industry. In this case, The Boomers Company, situated in Rochester, New York, engages in the production and retailing of construction products.  The company needs to generate an enhanced compensation framework. According to Eklund (2019), a compensation plan facilitates approximately 80% development in an organization by encouraging personnel to offer their best services. Due to the high demand and competitive industry dynamics, most companies have generated an efficient compensation framework in accomplishing achievements. The paper aims at analyzing a compensation strategy for Boomers Company, including ways employment opportunity laws, pay for performance, strategy recommendation, and the company should deploy compensation package.

Equal Compensation Laws

The equal compensation regulations are guiding principles that secure each employee’s constitutional rights to obtain a similar payment reimbursement without discernment. The laws oversee the personnel’s membership based on diverse races, disability, and sex. The rules assess the tasks undertaken based on the corporation’s skills, efforts, and similar working conditions. Regarding the equal compensation plan integrated into Boomers Company, a significant impact has been experienced on its framework. The equal pay act is challenging to determine in compensating employees due to the company’s exceptional capabilities and efforts. Because of the challenges, it is becoming extra challenging to award every employee based on their duties. Additionally, there are various duties that women personnel are unable to execute certain duties that men can achieve. This makes it challenging to compensate the personnel equally. The equal compensation framework in reducing the gap male and female are entitled to.

Nonetheless, this undistinguishable compensation plan disheartened men personnel who believed they are not accorded the appropriate compensation for their rightful efforts. Regarding the Boomers Company, whereby the duties are equal, the affliction of proof turns on the business. This comparable pay approach makes it challenging for the mid-level corporation to incorporate an efficient compensation strategy for every employee. Employees might opt for go-slows or even protest in certain scenarios, generating a dispute in the compensation.  The four advantages of an employment compensation act, for instance, superiority, value, and manufacture of quality products, are quite challenging for the company to accomplish during the compensation frameworks.

Pay-For-Performance and Competency-Based Pay.

Pay for performance is a form of compensation framework that advances a viable reward for the corporation’s reliable and diligent person. Compared to other compensation plan strategies, this strategy is proposed to inspire, appreciate, and repay the employees’ hard work in numerous working environments. Nonetheless, there are numerous benefits and shortcomings that pay-for-performance has on personnel in the organizational structure.  One of the key advantages entails helping the manager in developing defined frameworks in organizational objectives. The personnel can concentrate on work undertakings for improved performance. On the other hand, the key disadvantage involves being a demotivating factor when objectives become challenging to accomplish. The administrator bears a high stake in the regulations and the personnel’s objectives to accomplish, which can be demanding and indefinite. The system may lead to a corporation’s liability to sustain exorbitant services and even pay problems when it is not efficiently regulated.  The employees will concentrate on discrete performance overlooking the team spirit and coordination in the corporation. The organization’s objectives can be accomplished as the business will concentrate on short-term objectives.

The competency-based pay is a structure that recompenses personnel based on their abilities and efforts in the company.  This payment structure is proposed to reward employees based on their understanding and specialty in the company’s branches. Compared to another form of compensation strategy, competency-based pay has a plain framework that uses the corporate objectives.  The advantage of competency-based pay is entails motivating personnel better and offering back to the corporation. The personnel will feel loved and cared for in the corporation as they discharge their mandates. With this strategy, the company will be able to accomplish the set objectives in the industry. The competency-based pay may develop a split and disagreement in the company, an aspect that can change the company’s quest to accomplish its objectives. Administrators tend to be close to specific personnel, which will result in preference. The employees will concentrate on discrete performance overlooking the team coordination within the company.

Compensation Strategy

The compensation strategy to be used by my corporation is the direct system of payment. This is cash rewarded to personnel on an hourly basis, remunerations, commission, and gratuities. The compensation plan strategy is situated under the base pay and variable pay structure. Nonetheless, employees are typically reimbursed based on completing tasks as per the arrangement with the manager. The capable and semi-skilled personnel are regularly awarded hourly salaries while the monthly salaries and wages for specialized and well-educated personnel. Part-time and momentary personnel will be granted hourly. This compensation plan bears a significant benefit to the person and the operations of the company.  The direct compensation plan enhances the company’s competitive aspects. Personnel will be contented with offering their abilities and instilling a sense of care. With an optimistic analysis from the personnel, clienteles will be fascinated to pursue the company’s services. According to Huang et al. (2015), approximately 57% of employees have directly profited from the compensation plan. This framework will let me pay mid-level managers on the grounds of their working effort provided to the company.

Impact of Motivational Theories

The optimal level theory provides a resting period for employees after achieving the objectives. During this period, the employee may partake in additional activities such as exercising, family time, and vacation excursions. This motivational theory affects executive performance as employees will create an extra period for their responsibilities. Most of the personnel will be inspired to offer their best to the corporation, an aspect that will enhance the business’ performance.

Humanistic Theory

The Humanistic theory is an aspect that evaluates the capabilities of a person based on his self-assurance and accomplishing the organization’s ideas (Mytty Pedak & Sun, 2016).  The corporation should enhance the humanistic theory through training on hunger, safety, and security needs, encouraging and guiding them on modes of increasing their competitiveness within the corporation.

Direct Compensation Strategy

The direct compensation plan approach, such as hourly, gratuities, remuneration, and the commission, will openly affect its economic stability. Employees will be capable of offering their best abilities because of advance payment paybacks received. More personnel will be encouraged to work because of their substantial working reparation plan. The employee retention rate will be improved as more personnel will be contented to offer their services because of efficient payment plans. As the company’s chief executive officer, I will award my administrators a pay of $ 30/hr. This income wage is appropriate as the organization has not met the principal economic standards to improve its operational plan efficiently. The mid-level administrator’s remuneration package has established the prerequisite threshold of the lowest salary range of the country.

Ways of Assessing my Compensation Strategy

Over one year, this compensation strategy plan will efficiently develop the company’s revenue base. The evaluation strategy that I will incorporate to gauge the development and operation is through measurement workers’ performance assessments and the organization’s capability in assessing the organizational goals. Being the manager, I will measure the company’s compensation strategy based on the market’s competitive nature. An affirmative review from the personnel will establish the organization’s position in the industry.  Direct compensation drives all the personnel to move out of their comfort zones by improving their capabilities. This plan aid the manager in setting a well-defined outline in setting administrative objectives. The personnel will be in a position to concentrate on work undertakings for improved performance. The corporation will preserve more performance employees and generates an affirmative performance culture.




Legally Mandated Benefits Direct Benefits Indirect Benefits
One of the legally mandated benefits includes a standard living wage. This will allow staff members to earn adequate revenue and prevent them from being engrossed in poverty.


The other benefit involves social security benefits. It provides a fractional standby revenue for eligible pensioners and disabled persons and their wives, kids, and survivors.


Other benefits include health insurance. Providing health cover as an employee subsidy is one of the most efficient steps. Health benefits may present a variety of welfares, such as enhancing productivity, enhancing self-confidence, and assisting in shaping affirmative company culture.



Direct benefits are significant towards guaranteeing effective operations in a company. The direct benefits I may opt to offer include sick leave, vacation packages, dental benefits, a fitness benefit, and offering education scholarships to family members being supported by the employees. Indirect benefits are essential towards guaranteeing cohesiveness and coordination between members of staff. One of the major indirect benefits I intend to offer to include recreational programs and holidays. The programs are vital in guaranteeing members’ morale is high and provides a considerable amount of rest. The other indirect benefit includes seminars. This offers staff members a chance to gain information from other professionals regarding ways of enhancing productivity. The other benefit includes pensions. Pensions are vital in boosting the morale among employees who can concentrate, knowing that they are guaranteed a retirement package upon their retirement period.


Eklund, M. A. (2019). Compensation According to Strategy. In Fairness of CEO Compensation (pp. 99-104). Springer, Cham.

Huang, Q., Zhang, J., Sabbaghi, A., & Dasgupta, T. (2015). Optimal offline compensation of shape shrinkage for three-dimensional printing processes. Iie transactions, 47(5), 431-441.

Mytty, N., Pedak, K., & Sun, C. (2016). Aligning Compensation Strategy with Business Strategy-A case study of a company within the service industry.

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