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Organizations that wish to remain operational in present-day competitive markets have to invest in evidence-based compensation frameworks. Some companies, including my present workplace, have not recorded maximum benefits associated with the existence of reward systems. These institutions may have overlooked major elements that influence the effectiveness of reimbursement packages.
As this paper reveals, successful organizations consider factors such as the anticipated objectives to be realized and the prevailing market competitiveness when developing their remuneration systems. Justifying the significance of the above factors requires me to describe the status of compensation systems in my current workplace, including some aspects that need to be improved such as providing incentives and aligning salaries and wages with those of its competitors.
My Organization’s Present Compensation System
My current organization, McDonald’s, is a well-recognized fast-food business based in the U.S. It has branches that are spread across various countries around the globe. My company boasts of a team of more than 235000 workers in all its approximately 36000 stores (Olsen, Popovich, & Thompson, 2016). Although this organization has a huge customer base, it is alarming that its recent performance has been declining.
McDonald’s current compensation system seems to contribute significantly to this deteriorating profitability. According to Olsen et al. (2016), this company’s overall returns went down by roughly 15% from almost 6 billion U.S dollars recorded in 2013 to about 4.8 billion U.S. dollars realized in 2014. Although it is possible to have other factors such as poor work-life balance and inexperienced taskforce leading to this low productivity levels, an article by Bloomberg (2018) reveals the pitiable nature of the prevailing compensation framework that does not recognize the impact of incentives and reasonable wages on the overall business performance.
Workers in several McDonald’s outlets participated in protests dubbed “Fight for $15” (Bloomberg, 2018, para. 5) following the company’s move to deny them reasonable remuneration packages and incentives. Overall, the prevailing decline in profitability in my company indicates the extent to which it has failed to recognize the significance of a well-researched compensation framework that appreciates the role of motivated employees in informing business performance. Consequently, as it will be revealed later, several areas may need to be changed to reap the best from McDonald’s current remuneration scheme.
Factors to Consider when Developing Compensation Systems
One of the factors that need to be considered revolves around the anticipated objectives, which the required remuneration structure seeks to achieve. For instance, a company may implement a compensation system to be recognized as the employer of choice. Another system may focus on linking remuneration packages to workers’ performance. The study by Onken-Menke, Nüesch, and Kröll (2018) presents flexible working conditions as among issues that companies need to emphasize in their compensation frameworks.
Such flexible job environments attract new employees while at the same time helping businesses to retain their existing teams of experienced personnel. Specifically, this strategy enhances “organizational attractiveness for job seekers and the organizational attachment of employees” (Onken-Menke et al., 2018, p. 239). High employee-retention levels and the capacity to attract new and competent workers characterize many global institutions.
Another factor to consider when designing a compensation framework is the prevailing market competitiveness. Employers should ensure that their employees receive wages and salaries that match what other businesses in the same industry are providing (Bloomberg, 2018). Workers are likely to quit or demonstrate low morale and, consequently, reduced productivity, especially when they realize that their respective working conditions, for instance, work-life balance, salaries, and incentives among others, are not comparable to what competitor companies are giving.
Areas of Improvement for My Company
As earlier mentioned, regarding objectives, companies that seek to be recognized as employers of choice implement compensation frameworks, which focus more on benefits, as opposed to salaries, pay based on employees’ performance, and provide flexible working conditions. McDonald’s should restructure its compensation system in a way that recognizes the need for reimbursing workers fairly and in line with the amount of job done. The current framework emphasizes profits more than workers’ welfare and hence the reason why some of them have been engaging in protests.
This company should also do a market analysis to investigate various factors that well-performing multinational organizations such as Google and General Motors considered when implementing compensation systems, which have been confirmed to contribute significantly to their present success. This strategy will also help to customize its prevailing remuneration model to match what competitors are offering, hence eliminating chances of turnover among employees. Well-compensated workers not only feel motivated but also ensure quality services, which, in turn, translate into higher profitability levels.
Compensation systems play a crucial function in helping to realize human resource management agendas of ensuring enhanced organizational performance and productivity through a motivated team of employees. Renowned companies such as Google and General Motors have managed to attain their current global business leadership, thanks to their well-researched compensation models, which have not only helped to attract experienced human resources but also retain the existing pool of knowledgeable workers. Organizations such as McDonald’s should consider factors, including the anticipated objectives and market competitiveness, when designing their compensation systems.
Bloomberg. (2018). McDonald’s workers say the company is breaking its minimum wage pledge. Fortune. Web.
Olsen, P. E., Popovich, K., & Thompson, T. (2016). WTF? McDonald’s minion unhappy meal. Journal of Critical Incidents, 9, 115-117.
Onken-Menke, G., Nüesch, S., & Kröll, C. (2018). Are you attracted? Do you remain? Meta-analytic evidence on flexible work practices. Business Research, 11(2), 239-277.