Pay Structures and Internal Alignment

Topics: Employment, Interior point method, Regulatory Focus Theory Pages: 6 (1583 words) Published: October 26, 2013


Martin Straight Compressors (MSC) is a manufacturing company located out of Toledo, Ohio. Martin Straight Compressors employ 4600 people worldwide. MCS’s Chatham location is a small Canadian company that focuses on manufacturing compressors for heavy industries. Chatham employees approximately 70 salaried and 50 hourly employees. Beginning in 1999, Martin Straight Compressors Chatham had begun facing numerous compensation issues and conflicts.

Some of the issues included:

Having 7 authorized but unfilled middle-level management positions Manager-employee relationships broken
Documentation not up-to-date with objectives, processes, progress, performance plans Hourly staff don’t respect the owners
Increased workload with no compensation
Loss of commitment, motivation, and job security among employees New management brought it while problems are still effecting the day-to-day functions of the organization Merit process isn’t liked

Restrictions on merit raises by head office
Union involvement
Flawed gain-share plan
Merit raises go to salaried, non-union staff
Merit raises for one employee depend on other employees
Executive incentive plan uses different formulas for different employees

This consultation report will begin with identifying the two main problems MSC faces and how to resolve them. Next we will apply the Equity Theory and investigate why certain employees are unhappy about the current compensation system. We will look at the company’s standpoint from a competitor’s point of view, and what methods to use to ensure fast, accurate, and acceptable results to ensure MSC continues to grow and be profitable.

The 2 Main Problems

After analyzing the process and theories used by Martin Straight Compressors, two main issues become precedent:

1. MSC doesn’t have a fair or efficient compensation method. The processes and ideologies used in making decisions in regards to pay are flawed. There is a gap between pay levels due to different formulas that are used for different employees. Merit increases given to employees depend on other staff members within the organization. When companies adopt processes that are unfair, employees lose motivation. As well, inefficient practices puts production at a standstill and costs the organization a great deal of time and money.

2. Employees are not a part of the decision making process. They become uninterested in the events going on within the organization because dedication and commitment are lost. These employees may not fully understand the whole picture, like restrictions coming from head office. When employees feel they are not an important part of the organizations decision-making, they become alienated and their involvement decreases. They become unwilling to develop solutions to problems.

Resolution of Problems

Encourage employee involvement as much as possible. It is important for employees to have a passion for the work that they do and the organization they belong to. Encourage feedback by holding monthly meetings where everyone is invited to express any questions or concerns they have. Develop a team of cross-functional representatives that meet on a regular basis to discuss issues that are important to the staff. If the high-level managers empower employees to be involvement and provide feedback, the organization will be “more likely to achieve commitment, trust, and acceptance” (Milkovich, Newman, Gerhart, Cole & Yap , 2013) of a revised compensation structure.

Developing a new compensation method is costly and timely. However it is essential to the functioning of an organization. MSC needs to begin with reviewing the compensation budget (Heathfield, 2001). This way management understands how much they are allowed to spend without putting the organization in debt. Analyzing the current job structure should be done on a regular basis to ensure the organization is able to adapt to internal churn, internal succession...

References: (APA Format)
Gondzio, J., & Grothey, A. (2009, May). Exploiting structure in parallel implementation of interior point methods for optimization. Retrieved rom Retrieved on October 6, 2013.
Heathfield, S. (2001, June 05). Compensation strategies and structure. Retrieved from structure/compensation-structure.htm. Retrieved on October 6, 2013.
Milkovich, G., Newman, J., Gerhart, B., Cole, N., & Yap , M. (2013). Compensation. (4th ed., p. 01). McGraw-Hill Ryerson Limited. Retrieved on October 6, 2013.
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