The Henderson Printing compensation system is informal, that is the payment arrangement is not regulated by the basic standards of payment such as job description, experience and the level of education among others. Consequently, this system of compensation is accompanied by numerous issues including lack of salary sustainability, equitability, competitiveness, and satisfaction to some workers. The absence of salary sustainability mainly results from overpaying employees especially when their output is not directly proportional to productivity. On the other hand, several workers could be underpaid leading to increased employee turnover. Further, the salaries could be unevenly distributed resulting in low motivation for some workers due to the sense of unfairness. Also, the absence of a formalized compensation system leads to lack of employees’ satisfaction. In the occasion, the employees are not satisfied, they output is likely to be low while productivity will be reduced. Lastly, the compensation system ought to be competitive to ensure that workers are retained or not lost to competitor firms. Further, noncompetitive salaries lead to augmented employees turn over. Further, the organizations need to have a systemized mechanism of increasing salaries or proffering benefits. Methods that are not systematic may result in an organization’s workers especially the unlucky questioning why they are not considered while increases or benefits are given. As such, the employees will become demotivated.
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However, various changes can be inculcated into the compensation plan to address the issues and subsequently improve the company performance. In the first place, the company should develop a formalized payment plan. The arrangement will incorporate the targets of the compensation, indicate the timeline for implementing and completing the objectives and delimit the budget. The following aspect of the compensation plan should include designating a person to execute structuring the payment arrangement. The individual will be tasked with determining whether the station should be perpetual or provisional, the executor of the arrangement once it is put in place, the expenses of an expert’s appraisal, and the expense of looking inside against that of going outside.
The following change that can be incorporated into the organization is coming up with a payment philosophy. The compensation philosophy will comprise identifying the point of fixing wages against the standard market price, determining the differentiation in pay structures for executives, sales workers, and professionals that are non-contingent pay against incentive-based or base pay against hourly and commission wages. The philosophy should also determine the members of the compensation committee. Also, the payment philosophy determines the degree by which workers benefits ought to substitute or complement cash payments. The next change needs to include undertaking a work evaluation of all positions. The analysis will seek to assess the undertakings by key departments and tasks that compulsorily must be carried out and individuals to undertake them. The assessment results will include input from senior executives in units such as finance, marketing, administration, sales and production among other suitable departments to institute an organizational structure and primary roles of each.