Human Resource Management, 3rd Edition

Chapter 12

Designing Compensation and Benefit Packages

A MANAGER'S PERSPECTIVE

TOWANDA DRIVES TOWARD THE CAFÉ WHERE SHE IS MEETING A SMALL GROUP OF SALES REPRESENTATIVES WHOM SHE SUPERVISES. SHOULD SHE ASK THEIR OPINIONS ABOUT THE ISSUES ON HER MIND?

Although Towanda has little experience in human resource management, she has been placed on a task force charged with examining different approaches to compensation. One issue the task force has discussed is employee benefits. Towanda was surprised to learn that almost one third of what the company spends on compensation is used to provide employee benefits such as health insurance. In some ways this doesn't make sense. Why not just pay higher wages and let employees who want things like insurance obtain their own? Towanda thinks that sales representatives might be happier if they received bigger raises and fewer benefits. Most members of the task force, however, feel that the sales representatives place a high value on employee benefits.

Towanda agrees with other members of the task force when it comes to pay for performance. She feels strongly that sales representatives with higher performance should receive more pay. The problem comes in defining high performance. In the group that she supervises, Towanda can identify two sales representatives who always have top sales numbers. Unfortunately, they also seem to negatively influence ...