INSTITUTE –University School
of Business
DEPARTMENT -Management
M.B.A
Human Resource Management: 24BAT-622
Faculty Name : Dr. Bhanupriya Khatri
(Associate Professor)
Topic name: Case Study
UNIT-2; Chapter-2
Compensation DISCOVER . LEARN . EMPOWER
Management
Course Objective
COB No. Title
To enable the students to understand the importance of human resources as
an asset and to sensitise the students to the various facets of managing
COB1 human resource in the real world.
To enable the students to develop, implement and evaluate organizational
COB2 development strategies, aimed at promoting organizational effectiveness.
Course Outcomes
CO No. Title Level
To understand the concept of human resource Understand/
CO1
management in contemporary organizations. Remember
To apply the human resource management functions in Apply
CO2
today’s organizations.
To analyze career planning and development practices of
organizations and their importance in building a talented
CO3 Analyse
workforce.
To evaluate the new compensation structures consistent
CO4 Evaluate
with the prevailing industry standards.
To design and formulate HR policies for acquisition,
Design/
CO5 development and retention of talent in today's changing
Create
workplaces.
Concept of Human
Resource Management
Course Outcome Mapped
CO4: To evaluate the new compensation
structures consistent with the prevailing
industry standards.
Will be covered in
this lecture
4
Defining Compensation
Management at TechCo
Solutions
• TechCo Solutions is a growing mid-sized IT firm with 800 employees
across various functions, including software development, customer
support, and administration.
• While the firm experienced steady growth, employee turnover
increased from 12% to 28% over two years.
• Exit interviews revealed dissatisfaction with salary levels, perceived
lack of fairness, and unclear promotion policies.
• The company's compensation structure included:
• Fixed salaries based on job levels.
• Annual bonuses, which were uniform across teams.
• Minimal additional benefits (basic health insurance and paid time off).
Problem Statement
1.High turnover, especially among high-performing employees.
2.Limited differentiation in pay for high and low performers.
3.Outdated compensation practices lacking market competitiveness.
Action Plan
• Phase 1: Analysis
1.Employee Feedback:
1. Conducted an anonymous employee survey to gauge satisfaction with pay,
benefits, and recognition.
2. Focus groups were held with employees across departments to understand
unique concerns.
2.Market Benchmarking:
1. Partnered with a compensation consulting firm to compare TechCo’s pay
structures with industry standards.
2. Identified gaps, such as below-average pay for senior roles and lack of
performance-based incentives.
3. Internal Pay Equity Review:
1. Audited salaries to ensure fair pay across similar roles and to address any
gender or diversity pay gaps.
Phase 2: Designing a New
Compensation Strategy
1.Pay Structure Redesign:
1. Created a tiered system: Base Pay + Performance Pay + Benefits.
2. Adjusted base salaries for underpaid positions to align with market
benchmarks.
2.Performance-Based Incentives:
1. Introduced bonuses tied to individual, team, and organizational goals.
2. Designed metrics for performance evaluation, including customer
satisfaction and project delivery timelines.
3. Enhanced Benefits:
1. Expanded health insurance coverage to include dependents.
2. Introduced wellness programs, such as fitness subsidies and mental health
support.
3. Added career development opportunities, such as funded certifications and
courses.
4. Transparency and Communication:
1. Rolled out a digital Total Rewards Dashboard where employees could view
their pay and benefits in one place.
2. Hosted town halls to explain the new structure and address concerns.
Implementation
1.Pilot Testing:
1. Rolled out the new compensation strategy in two departments (Customer
Support and Software Development) for six months.
2. Collected feedback through surveys and interviews to refine the plan.
2.Training Managers:
1. Trained managers to conduct fair and consistent performance evaluations.
2. Provided tools to help managers communicate pay changes effectively.
3.Organization-Wide Launch:
1. Implemented the revised strategy for all employees after incorporating
feedback from the pilot.
Results
1.Employee Retention:
1. Turnover dropped from 28% to 14% within a year.
2. High-performing employees reported a 35% increase in job satisfaction.
2.Productivity and Engagement:
1. Team productivity increased by 18%, with improved collaboration and morale.
2. Participation in training programs rose by 60%, reflecting increased interest in
growth opportunities.
3.Market Competitiveness:
1. TechCo’s revised pay structure positioned it in the 75th percentile of the IT industry
for compensation.
Discussion
• Key Success Factors
• Transparent communication about compensation changes reduced
resistance.
• A performance-based incentive system motivated employees to
exceed expectations.
• Enhanced benefits addressed broader employee needs, improving
work-life balance.
Challenges Encountered
• Resistance from some managers who preferred the old system.
• Initial skepticism among employees about the fairness of
performance evaluations.
Lessons Learned
• Compensation is not just about salary; a holistic approach, including
benefits and career growth, creates more value.
• Regular reviews are essential to ensure ongoing alignment with
market trends and employee expectations.
Questions for Reflection
1.What metrics should be used to evaluate the long-term effectiveness
of the new compensation system?
2.How can TechCo ensure that performance evaluations remain fair
and unbiased?
3.Should TechCo consider profit-sharing or stock options for its senior
employees?
4.How might the company address compensation dissatisfaction for
roles where market adjustments are not feasible?
REFERENCES
Text Books
Dessler, G.2013. Human Resource Management. 15th Edition, Prentice-Hall, India,
ISBN:9780134235455.
Online Articles
•https://www.managementstudyguide.com/how-to-retain-best-employees.htm
•https://www.zippia.com/employer/7-ways-reduce-employee-attrition/
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