Compensate Then Motivate

Prior to any knowledge I have learned from the readings and lectures about expatriate compensation and country differences in compensation, I would have answered this question much different than I am now. Before learning these things, my immediate answer would probably have been to steer clear of moving all the way across the world. I’m what they call a homebody, so the thought of up and moving away from my friends and family is not really an option for me. It may be a positive opportunity for me career wise, but I would feel as though I could find those positive moves elsewhere as well. 

With personal reasons aside, however, some factors I would need to consider include: what incentives are being offered, what my living and working conditions will look like, the services premiums offered, hardship allowance and lastly mobility premiums. While each of these factors are presented within the text, I feel as though they all fit into my wants and needs as well if I were to accept an offer that would require me to live and work internationally.

What would convince me to take the opportunity would definitely have a lot to do with how much higher of a compensation I would be making and what those positive career moves look like. Foreign compensation looks a lot different than those of the US, including the difference in currency, cost of living, and benefits. Different jobs have different values depending on the country as well, so that is why figuring out what those “positive” career moves look like is important too. With everything laid out in front of me, those two things would tell me the most and if it’s worth the chance or not.     

After watching the PBS segment, compensation for an executive is a lot more complex and integrated than middle tier management. For executives, they have much more of a give and take policy in order of retaining the appropriate talent for their company. Compensation can be used as a motivating factor for employees, and it will encourage people to work harder therefore having higher company morale and productivity. Leadership also plays a major role in determining pay grades for individuals. Typically, a leader should be paid higher than others. Risk factors should be associated with rewards, and executives tend to fall into that category of making risky decisions that can substantially benefit the company. Poor compensation will also make it difficult to attract and retain top talent employees in any industry. When making compensation decisions, it may appear to be excessive when it is very attractive and high. However, if the employee deserves the compensation and works hard for it then it is appropriate as time goes on. Compensation also depends on someone’s level of education and their experience. Therefore, executives have the highest experience and typically a higher education level than others which appears excessive based on compensation, but over time will gradually transpire into appropriate compensation. 

There are a few components of compensation that are most essential to motivate executives to lead companies toward competitive advantage. The first, and I would say the most straightforward component, is a well thought out compensation package. When properly used and the more attractive one is, it will attract and retain the best talent in an industry. This therefore leads to a better and more successful company, because a company is only as successful as their weakest link. In today’s world, the expectations of employees are much higher than what they once were so they need to be compensated for their higher performance. As it should be, however, those who do not live up to their expectations should not have as high of a compensation package as those who go above and beyond. Another component of compensation that motivates executives are their bonuses. These will fluctuate according to the performance of their employees and how well the company is doing. This can either be based off of job tiers or from employees as a whole. Bonuses are also used to motivate employees in order for the company to reach the organizational goals. Any kind of compensation beyond a base salary can be used as a motivator and be used for higher employee performance which correlates to better productivity.

Discretionary benefits are a major cost that companies are facing. In fact, according to the text, these benefits account for almost 23 percent of payroll costs. If I were management, that number would be a terrifying reality. 

Discretionary benefits consist of three categories. In no order of significance, those categories include: protection programs, paid time off, and services. Within those three categories, there are a multitude of different benefits. I have been given the task, as a compensation professional, to rank each of these benefits from the ones I would most likely drop to the ones I would least likely drop. 

The category in which I would go to first in terms of elimination, would be services. Both day care and tuition reimbursement programs are two benefits that I would be quick to eliminate. I believe that family is extremely important and I should expect to have a high percentage of employees who have children, however, I do not think it should be the responsibility of the employer to provide and pay for a daycare service. Tuition reimbursement is another benefit that the employer should not be responsible for. Education should be a top priority for most companies, but there are many scholarships and other ways that employees can pay for their college career. 

Paid time off is the next category I would look into, although this category plays a huge role in the employees morale. It’s beneficial to maintain positive employee behavior as it relates to better performance. As I mentioned earlier too, having employees who want to spend time with families around the holidays is essential. 

These benefits are significant to people’s lives outside of work, however, they are not as important as the benefits under the protection program category. The three subcategories under protection programs are: disability insurance, life insurance, and retirement programs. These are all things as a compensation professional that I refuse to eliminate.

  

The company I chose to research is Sherwin Williams. There were many factors that went into this choice, however the factor that prevailed the most was the fact that I will be working with them post graduation.

With that being said, I think it is extremely important for me to learn what type of pay structure they have and what works best for both the company and their employees. One of the things that really drew me in with them, is the room for growth within the company. Their job types range from a sales associate making an hourly minimum wage, all the way to senior level managers and specialists. Whether I stick with Sherwin Williams and end up working in their headquarters or gain the experience needed to move on to the next job, compensation will play a major role in my next steps. 

Based on my personal experience with this company, the research I have done and material from the text, I would recommend Sherwin Williams offers a job-based pay structure.

One reason for this, is due to their form of a merit pay program. According to the text a merit pay program, “assumes that employees’ compensation over time should be determined, at least in part, by differences in job performance.” This means that employees will receive higher compensation based on higher job performance. This is an incentive for employees to perform better, motivates them for the future and retains valued employees. The better the manager at Sherwin Williams, the higher compensation and salary increase they will receive. 

They also have an incentive plan. I know this first handedly to be true, because in my acceptance letter there is a section titled “Compensation and Benefits”. Within this section, it describes other things I may qualify for on top of my base pay. One of those things being “the Sherwin Williams incentive plan”. 

Due to these facts and what I have learned about both pay structures, it is clear that the best structure for Sherwin Williams is job-based. 

About a year ago, just before the world came to a halt, I was offered one of my first ever job promotions. I had been working at a cafe located on-campus for about a year and a half, when there became rumors of our boss giving another student the opportunity to become a shift lead. It really wasn’t much of a second thought that most people believed I would be the one to take on that role, and at the time so did I. But then reality hit when my boss gave me the opportunity to promote.

At first I was thrilled and grateful he even thought of me. “It can help build my resume and the intrinsic compensation that my work can help other employees around me,” I (obviously) thought to myself. However, the real thing a starving college student wants to know is what kind of extrinsic compensation I would be getting. That, it turned out, was only about 20 cents more an hour than what I was already making. I had to weigh out all of my options with my school work load and if I could really afford to take on the hours and work needed to be a successful shift lead. I unfortunately had to pass up the opportunity, because school was my number one priority and 20 cents more an hour was not enough extrinsic compensation for me. I think compensation motivated that behavior, because if I would have gotten a more substantial raise that would have been worth it then I most likely would have taken it.