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JVA Corporation’s revenue was greatly affected by the economic recession and terrorist aftermath of 2001. As a result, the corporation suffered a loss of $53 billion during that fiscal year. This prompted the company to make the decision of shutting down some of its international factories, since it could hardly sustain higher operational costs, for instance, employees’ compensation expenses. About 35% of 150, 000 employees in this corporation are eligible for additional compensation, which represents 8% of the company’s revenue. To this end, it has been proposed that this higher compensation should be reduced from 8% to 5%. Therefore, the company should focus on three equity principles to develop fair compensation and recruit new employees who do not qualify for the 8% additional perk. This will help to reduce the company’s operational costs and to increase its future financial strength/revenue earnings. Moreover, the existing employees should be redeployed at cheaper costs, since employee retrenchment would not be the best option because it fails to take into account the future of the workers (Rue & Lloyd, 2009).
Analysis of the Proposed Strategies
Internal equity is when the job evaluation determines internal value of the job. The point- factor job evaluation is the quantifiable process explaining the reasons for pay differences and classifications. It indicates the reasons for the relationships between jobs within a pay structure. The point-factor job evaluation determines the internal value of jobs by placing them in a hierarchy and classifying jobs into grades based on compensable factors. Such factors include experience, education, technical skills, and working conditions (Rue & Lloyd, 2009). Jobs are separated into compensable factors, and they are rated and summed to get point values for the job.
The point-factor job evaluation has many advantages. First, it establishes the placement of positions by putting them in the pay system with other positions with common compensable factors. Second, compensable factors make sure that jobs are put into the pay system on the basis of job content. Third, the point-factor job evaluation provides managers with information on excessive compensation. The only disadvantage is that the job duties may not fit into one grade or job class (Pandey, 2006). The point-factor job evaluation can help JVA Corporation’s employees to understand compensable factors of their jobs and why their salaries are to be lowered, because compensable factors are different for every position. The point-factor evaluation can also be used in external equity as a comparison of pay levels between JVA Corporation and other companies that produce wireless technology devices, which are currently in a good financial position.
External equity is the second principle in compensation; it compares salaries and benefits of JVA Corporation employees with other workers in the same industry. In order to be competitive, JVA Corporation must conduct a survey to see if salaries/additional compensation perks are similar in other agencies. Jobs in other companies dealing with wireless technology devices are benchmarked, because they include bonuses, travel rewards, commissions, profit sharing, and duties in a broad range of jobs. External equity can help managers make strategic decisions regarding the company’s compensation programs.
Individual equity is the third principle that can be achieved by developing a compensation program, which recognizes excellent employees’ performance. An effective performance appraisal is important for developing and motivating employees for career advancement opportunities (Pandey, 2006). Therefore, JVA Corporation should not use a generic performance appraisal system, because it does not help develop employees. Regarding this, JVA Corporation should have a merit-based system in which employees are rewarded for meeting goals and recognized for accomplishments, since these help in promoting productivity, not only at the present, but also in the future.
Motivation is when employees act in a certain way and how hard they are willing to work to achieve goals (Pandey, 2006). Many employees can be motivated to work in JVA Corporation for many reasons. The theory of needs consists of several primary needs: achievement, power, and affiliation. It can be argued that the corporation’s employees are achievers, because they desire to help others and lead them to a career in the wireless technology industry, and they have a lot of responsibilities to protect interests of the company’s stakeholders. Job security is one of the top reasons why people join JVA Corporation, because it can be regarded as a stable job.
Power is one of the most important needs that motivate individuals to become JVA Corporation’s employees, because they have control and authority in their jobs. The corporation’s employees have needs for affiliation, since they are motivated to be part of an important and adventurous profession. Some people are encouraged to be the company’s employees, since they think that it is easy to meet the minimum qualifications. For instance, women can be motivated to become JVA Corporation’s employees for many reasons. Job security and the desire to help people are the most important reasons, followed by salary and serving the public. Women need to feel a sense of belonging. Being an employee of the corporation fulfills this wish and gives them pride. Women also like the independence and challenges that come with being the corporation’s employee, as well as opportunities for advancement. In order to recruit more females, JVA Corporation should focus on the opportunity to help people, early retirement, and advancement opportunities. Moreover, these newly recruited employees should be offered fewer compensation perks.
After the HRM director hire new employees, it is necessary to develop three strategic initiatives to retain both new and old workers. These strategies should include talent management, employee development, and succession planning (Rue & Lloyd, 2009). Talent management creates the organizational culture that attracts people to work for them and the community where the management values staff ideas, as well as aligns employees with its vision and mission. It is necessary to formulate these strategies for employees in the USA and other international locations. Talent management also provides employees with training and tools to do their jobs well, and it puts the right people in the right jobs. It also gives employees growth opportunities. Organizations are struggling to retain employees, and the areas that need the most improvement are: building a list of successors, having a work culture in which employees want to stay, and identifying gaps in competency levels.
An employee development program is the second strategic initiative, and it helps prepare employees to become future leaders, which is good for retention (Rue & Lloyd, 2009). For example, JVA Corporation can develop a leadership program that enables employees with more than five years experience to be team leaders, because some workers are eligible for a promotion after five years. Mentoring is also part of employee development, and all new employees should be assigned a mentor in a formal career mentoring program. In addition, JVA Corporation should have job rotation for its employees to learn about other opportunities in the development.
Successful planning is the third strategic initiative, and it helps organizations with leadership changes (Pandey, 2006). In summary, JVA Corporation needs to have a formal succession plan for senior management, middle management, and staff before they leave because they need employees with experience who can step in the positions and start working right away. Succession planning is also a good way to let employees know about future vacancies, and it helps retain the best workers. Employees have transferable skills, which are part of succession planning, since they can develop the skills and build confidence. As a result, the corporation’s profitability/productivity is enhanced by reducing compensation perks, for instance, unskilled/redundant employees’ bonuses.