COMPENSATION MANAGEMENT

TUTORIAL 1
INTRODUCTION TO COMPENSATION MANAGEMENT
1. Case Study: Is equity possible?
Greenland Publishers is one of the world's leading English-language publishers.
Headquartered in New York, it has a subsidiary company in Singapore known as
Greengrass Publishing Pte Ltd.
Greengrass focuses on producing and
distributing broad-based publications ranging in genre such as business,
information technology, lifestyle, women, children, cooking and spiritual.
Greengrass employs its own pool of writers, editors, sub-editors and graphic
designers. It is always a great challenge to the companys HR department to
attract, retain and motivate these employees in the editorial department. In order
to produce good publication for sale, Greengrass often engage the services of
freelance writers, sub-editors and graphic designers in order to expand its pool of
talents to generate fresh and original ideas to meet consumer demands and
generate additional business opportunities.
You are a newly hired Compensation Manager of Greengrass. After an open
dialogue session with the employees in the editorial department, you discover
that the current employees are not happy with their remuneration packages.
They felt that they are paid less than the freelance contributors engaged by the
company and many of these freelance contributors were previously permanent
employees of the company. They have switched to providing freelance services
to the company in order to enjoy better compensation and time flexibility.
You know these employees are hoping that you would make some form of
favourable changes in compensation for them. It is also pressing that you
develop an effective compensation strategy for the company to manage its talent
in order to stay successful in the publishing business.

a) As a Compensation Manager, what do you think are the different forms of

fairness in a compensation plan for the editorial employees and freelance
contributors that you need to observe and why?
Internal Equity
Comparison of job or skills/ importance required of both editorial employees and
freelance contributors and remunerate them accordingly.
External Equity
Comparison against other employers with similar jobs and skills and
appropriately remunerate them in comparison.
Employee Equity
Performances of the different employees and the seniority and compensate them
accordingly.
b) What are the various processes you would put in place to ensure that the
different forms of fairness are achieved in the editorial department?
Performance appraisals
Job Analysis and Evaluation
Industry Survey
c) Would you involve the editors and managers in developing and formulating
the compensation plan? Explain the relevance of the compensation plan to
the editors and managers.
Yes,
To managers it is a
o Major cost item
o Means of influencing employees
o Source of Power
To editors
Being rewarded for:
Doing a good job
Having the right SKAs
Being loyal to the company
Financial security
Social well-being

2. Sep 2010 Exam Questions: How to stay competitive in a dynamic

industry?
Advanced Engineering Solutions (AES) is an international professional services
organisation, specialising in providing petroleum engineering solutions. AES
currently employs 180 highly skilled and specialised petroleum engineers. AES
has offices in Singapore, Great Britain, Australia, South Africa and India and was
recently floated on the stock exchange.
Recently, the top management team was restructured to a flat structure, allowing
it to be more conducive to making important decisions quickly. This allows AES to
gain competitive advantage by ensuring organisational flexibility to a rapidly
shifting industry, where global competition for clients and human capital is
common. Following the restructure, the top management team attended a
strategic planning weekend, where the MD outlined his high growth business
strategy coupled with a focus on innovative engineering solutions.
Currently, AES engineers collaborate and work in high performing teams.
Depending on the client and the project scope, engineers can be assigned to
different roles. Engineers are offered challenging work and a good level of job
variety. AES focuses on cross training and building their staff in terms of
experience and knowledge. AES offers salary packages which are matched in
terms of market competitiveness and only offers a few benefits, like free coffee
and tea.
Aligned with the business strategy and to provide a more comprehensive and
responsive service, AES engineers will integrate directly into client offices
working as part of their staff team. This will allow clients to make quick decisions
to real life situations, where AES engineers are readily available. However, this
sort of approach has been linked to high staff turnover, as staff are susceptible to
poaching by the client.
Lily Rhodes the HR Director has called for a team meeting with her Regional HR
Managers, Compensation Manager and Recruitment Manager. Her focus is to
review the overall HR strategy to ensure it is aligned with the new business
strategy.

(a)

What is competitive advantage and how can an organisation gain

competitive advantage through effective compensation management?
Competitive advantage is what an organisation have better than other
organisations in the similar industry.
Offer better compensation than other organisations in similar industry,
example better pay, bonus, leave.

(b)

Describe four criteria that Lily Rhodes and her team must consider to
ensure that they develop a good compensation system.

(c)

Efficiency
Achieve organisations objectives
Control labour costs
Equity
Fair treatment as perceived by employees
3 dimensions
Internal equity
External equity
Employee equity

Compliance
Comply with the government laws and regulations

Ethics
Comply with the companys values, belief and philosophy
Explain relational returns and identify two relational returns AES currently
provides. Suggest one additional relational return which could be
implemented for AES and give one reason for your answer.
Relational returns refers to intangible returns.
2 Relational returns AES currently provides includes:
o Engineers are offered challenging work and a good level of job
variety
o AES focuses on cross training and building their staff in terms of
experience and knowledge
AES can provide recognition and status through programmes such as
employee of the month or announcements of high performance within a
specific duration period.