Compensation Plan essay

Introduction

A compensation plan is a necessary tool in every organization as it is used to attract, motivate and retain qualified employees, so as to maximize their production and, hence, achieve the organizational goals. The XYZ Construction Company must, therefore, ensure that it develops a proper compensation plan for its project in Casper, as it can determine the failure or success of the project and the organization as well (Singer et.al, 2009).

The company is bound to experience several problems in developing a competitive compensation plan that will attract welders to work for their branch in Casper. These problems include differences in domestic tax rates. Different states have various tax rates on wages and, therefore, the company will be faced with the challenge of establishing a wage rate that will be attractive to potential welders from other states. The compensation plan must also conform to the current market rate, and this will pose a challenge to the organization in determining exactly how higher above the ever changing market rates the plan must be for it to attract qualified welders. Other challenges include external fluctuations, such as changes in inflation rates that alter the cost of operations, establishing a mix between cash and benefits, as the last ones play a major role in motivation employees, as well as in establishing mechanisms that will fit the compensation plan into the rest of the organization’s goals, philosophies and objectives (Zoltners et.al, 2006).

 

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In order to develop a competitive compensation plan, the organization should analyze the overall compensation guideline, research on the current compensation rates in the industry, list down all the important factors that will make up a good compensation for the welders, plan and implement the compensation strategy by communicating it to the potential employees.

The organization should make use of sampling technique for collecting accurate data that would be applied in developing a competitive compensation plan, and also employ data analysis techniques, such as questionnaires, interviews, observation, diaries and work plans (Johnson et.al, 2006).