Introduction to Organization
The organization in this compensation consultation analysis is the Retail Bakers of America (RBA). Retail Bakers of America is a company that emerged in 1981, as a non-profit trade association aimed at ensuring that the achievement of the baking industry across the United States (RBA, 2011). Collaborating with other interested members, the company creates specific industrial training programs and other small business initiatives to foster bakeries development (RBA, 2011).
The company supports a continuum of business strategies and techniques associated with bakeries industry to enhance corporate growth and quality of production. “We foster the community of retail bakeries providing a forum for the exchange of industry and business information, as well as networking, learning opportunities and mentoring among bakers, future, and existing” (RBA, 2011, para. 2). The RBA organization also supports the growth of industrial standards to enhance efficiencies in bakeries.
Retail Bakers of America enhances the development of industry standards in American retail bakeries through the formation of professional certification approaches, research, and development, as well as through school programs (RBA, 2011). RBA has mastered the needs of its consumers as it provides diverse products through its numerous outlets such as supermarkets, bakery outlets, food service stores, and vendors.
As the global business paradigm evolves from merely simple business practices to complicated techniques, objective-driven corporate models to meet the growing corporate competition, attracting, and retaining employees is becoming essential (Zingheim, Schuster, & Dertien, 2009).
Companies are looking for an exemplary performance that requires a competent workforce intrinsically motivated. Retail Bakers of America partners with retail bakers and associated companies work together towards strengthening the baking industry to stay competitive and independent in the rapidly growing corporate world.
Organizational Analysis
The general purpose of the Retail Bakers of America is to improve business operations and standards of bakeries across America (RBA, 2011). As a business enterprise, Retail Bakers of America believe that bakeries play a central role in the community because they provide diverse foodstuff for domestic use and celebrations. RBA aims to generate a complete community of bakeries and currently has 67 employees.
Retail Bakers of America believes that the retail baker’s industry is integral in providing an assortment of foods required to support different festivities. RBA (2011) assumes that “by providing an integral part of every holiday and personal milestone, bakeries are the center of all celebrations; they lift spirits and unite hearts” (para. 1).
Given such perceptions, the Retail Bakers of America intends to form a community of retail bakers, share business skills, and corporate development information, network bakeries, offer bakery-learning opportunities and enhance mentorship among the baker’s community (RBA, 2011). Bakeries offer comfort to people, and bakery zones are good social converging places for good vibes.
Mission, Vision, and Strategies of RBA
Mission
“The mission of the Retail Bakers of America is to improve the operation and profitability of retail bakeries” (RBA, 2011, para. 6). As a leading bakery, RBA aims at supporting and advocating for the development of bakeries in the United States and across the world by developing an online networking system, which managers and employees to share ideas, skills, knowledge and other resources that are essential in boosting business operations of bakeries (RBA, 2011).
Retail Bakers of America seeks to enhance business operations through the provision of learning opportunities to interested bakers, promote high standard business standards and business practices, interactive online networking, and communication (RBA, 2011). In the RBA, baking professionals across the world to meet online, share ideas, and business operation techniques through this online system to enable various bakery businesses to flourish.
Vision
“To make retail bakeries the desired destination for consumer purchase of all retail baked goods” (RBA, 2011, para. 5). RBA desires to develop a long-lasting trust and loyalty in the global community of bakeries on the services that it offers through the online community, especially to become the number one trusted bakery educator.
Concerned with the enhanced bakery profession and bakery education through a global online networking community of professional bakers and learners, the vision of seeing a strong community of bakers across the globe is irresistible. Retail Bakers of America aspires to have the greatest number of certified professional bakers across the American states and in several other parts of the world.
According to the chairperson of the Retail Bakers of America Sir Richard Reinwald, the bakery industry and profession is still young, and many people have ignored or underestimated its ability as it lacks professional baking standards (RBA, 2011). The company aspires to strengthen the professional baking community through a series of online knowledge sharing and networking to improve standards of bakeries.
Strategies
Since 2005, RBA has been under Association Management Group (AMG) in its management, but it has recently acquired independent management with a competent board of director (RBA, 2011). Like any other independent organization with a certain objectivity, Retail Bakers of America has an organizational structure that drives the operations of the company through a series of planning and strategies.
Retail Bakers of America has a hierarchical management setup that involves the Richard Reinwald as the Chairman, Paul Sapienza, as the finance director and Susan Nicolais as the senior treasurer (RBA, 2011). The main business operational strategies in the business are the utilization of online networking techniques, comprehensive gathering events of bakery tours, roadshow campaigns, and a series of educational initiatives (RBA, 2011).
The independent board of directors devises operational strategies of the company and implements new decisions that are paramount to the progress of the association. The board of directors and other management members design new business models and determine essential partnerships.
External Positional Comparison of Salary and Benefits for finance directors
Although companies may hire workers with similar professional specialization, salaries, and benefits across organizations differ distinctively depending on individual human resources management (Bloom & Reenen, 2010). The section of the report aimed at providing a comparative analysis of compensation packages offered by external organizations around the United States and those benefits offered by the Retail Bakers of America, for the position of finance director.
The position of director of finance is a common profession across several American companies, but compensation strategies differ from one organization to another (Economic Research Institute, 2014). This section covers a positional comparison of salary and benefits of RBA and other companies’ regarding the position of director of finance present in RBA and other companies in America.
Table 1: External Positional Comparison of Salary and Benefits (finance director)
(Source: Salary, 2014)
National average: Finance Director. Web.
New York:Finance Director. Web.
Finance Director RBA: Interview.
Compensation Package at 25% Percentile
Based on a 25% percentile calculation, the annual basic salary for the position of finance director stands at $125,305 (76.4%), $119,180 (69.8%), $101,334 (69.2%) in RBA, firms in New York, and the national average figure respectively. This means that the national base salary seems relative to be the lowest when compared to the base salary for finance directors in New York and RBA Company. Economic Research Institute (2014) asserts that companies that offer the highest salary experience low turnover rates of employees.
Hence, the finance director in RBA earns a favorable package when compared to the national average figure and firms in New York. The bonus package using the 25% percentile stands at $10, 105 (6.6%), $11,269 (6.6%), and $9,665 (6.6%) for finance directors working in RBA, firms in New York, and the national average figure correspondingly. Although no significant difference exists, this denotes that firms in New York offer the highest bonuses when compared to RBA and the national average figure.
At 25% percentile, the package for disability is $980 (2.8%), $1,195 (0.7%), $1,025 (0.7%), for the RBA, New York firms and the national average figure respectively. The information indicates that RBA offers the lowest disability package relative to the firms in New York and the national average. For the 401k package using the 25 percentile, RBA package stands at $4790 (2.9%), for New York firms at $4610 (2.7%), and the national average figure at $3,954 (2.7%).
This implies that RBA offers the highest 401k package than firms in New York and national wide. For the healthcare package at the 25% percentile, RBA offers $6,300 (3.7%), New York companies offer $4098 (2.4%), and the national average stands at $3,954 (2.7%). Hence, it implies that RBA offers the highest healthcare package relative to firms around New York and the national average figure.
Using 25% percentile, RBA offers a pension package of $8,997 (5.3%), firms in New York give $8196 (4.8%), while the national average figure is $7,029 (4.8%). This indicates that the pension package for RBA is the highest when compared to the package offered by firms in New York and the national average figure. Using 25 percentile, package for paid time-off is $4, 520 (2.6%), $16,050 (9.4%), $13,618 (9.3%) for RBA, firms in New York, and the national average figure respectively.
Comparatively, it is evident that RBA firms pay the lowest-paid time-off, followed by the firms in New York. The national average figure is the highest in this case. Faulkender, Kadyrzhanova, Prabhala, and Senbet (2010) state that companies that offer poorly paid-time-off reduce the productivity of employees because the poor package affects the overall remuneration package.
Thus, RBA has the risk of reducing the performance of its employees if it continues to offer such a package of paid time off. To help improve the pay situation, the company should add at least $420, to enhance the productivity of workers through the increased paid time-off. There is a high allocation of healthcare coverage that currently stands at $6300.
The figure suits employees, who have high risks of illnesses, and thus does not fit people working in the retail business like RBA. The healthcare package should reduce to at least $4200, a reasonable figure compared to the national healthcare average. The $1100 can go to salaries to boost monthly wage.
Internal assessment of the position
Extra financial support offered
Apart from the benefits offered as per the above table regarding the benefits given to the finance directors, RBA offers some more benefits such as insurance packages, healthcare programs, vacation time, and some retirement investment.
For the insurance packages, the company gives finance directors $5,210 for a life insurance package. Retail Bakers of America also gives the directors monthly health support coverage of $250 for medical counseling. The company gives the finance directors a vacation time of one-month for rest with $530 for upkeep. On retirement, members receive a sendoff package of $6,550 for recognition to diligence at work.
Performance Appraisal System
Performance appraisal may refer to the assessment of professional competence of an individual in an organization. The Retail Bakers of America have their unique way of assessing the performance of its workers, including its finance managers. The HR managers of RBA are responsible for overseeing the hiring and assessment of the finance director (RBA, 2011). The organization does not have many financial planning pressures, and finance directors tend to have minimal financial obligations of the company.
The organization does not consider many of the aspects regarding the American labor market while hiring its workforce in the managerial position, as many they offer lower requirements than other firms do (RBA, 2011). The HR department also considers the aspect that the organization is merely a non-profit company that inspires to change the value of retail bakeries, including their workforce and not a profit organization seeking to the higher competent workforce for high productivity.
For finance directors to become part of the RBA, performance appraisal for this position has certain evaluative measures. RBA undertakes a performance appraisal of its workers, including the finance directors in four months duration throughout the employment contract period. For the finance director to remain considered as effective in his/her professional duties, the director must accomplish all the responsibilities accorded to him/her (RBA, 2011).
The Finance directors must be capable of producing exemplary reports concerning the financial progress of the company. He directors must be capable of ensuring proper finance management as expected by the organizational policies governing finance control in RBA (RBA, 2011). When finance directors barely manage to score well in the assessment, they may agree on new terms of payments, reduced operational duties, and even agree on the continuation of the employment contract.
Reward and recognition programs
A reward is a form of a compensation strategy that organizations may use to recognize high performers in an institution. Rewards, according to motivation theories, may involve monetary value such as assets, cash, and other forms of tangible property (Bloom & Reenen, 2010). Retail Bakers of America have a compensation strategy that involves a continuum of organizational incentives offered for various positions, including the bakery management department (RBA, 2011).
RBA offers benefits through an annual reward program that involves recognizing innovative talents, industrious employees, and technologically competent employees.
Compared to the average package of benefits offered to several other food-processing organizations across the United States without proper rewards schemes, employees of RBA enjoy these reward practices (RBA, 2011). Even though the benefits offered for this position are far much lower compared to several other bakery organizations across the United States, the human resource practices of compensations seem fair (RBA, 2011).
Extra compensation programs
The Company offers the finance directors some extra compensation programs and options that are not included in the normal payment systems known in the national levels (RBA, 2011). Leave bonuses, transport bonuses, housing allowances, and workshop allowances are some of the incentives that RBA offers to its finance directors, while still serving the organization (RBA, 2011). Apart from those with estimated payments, RBA offers recognition programs, rewarding strategies to enhance employee professional development (RBA, 2011).
Good performers in the finance department normally receive certification to enhance professional standards as finance managers (RBA, 2011). Without financial acknowledgment, the HR department of RBA believes that rewarding of performing employees is one of the most effective strategies of compensating their goodwill.
Flex- scheduling
Workers may not enjoy working in a time-constrained organization as they lead to workplace stresses. Working on flexible schedules is an appropriate strategy that HR managers in RBA have noticed to have a great impact on employee motivation and performance. HR of RBA also practices flex scheduling, where managers work on flexible work programs designed to enhance employee satisfaction (RBA, 2011).
Two assistant finance directors in the RBA assist the finance director in carrying out major professional decisions (RBA, 2011). While committed somewhere on professional duties, the assistant financial directors normally assist in the professional duties carried out by the senior officer (RBA, 2011). The finance director enjoys some off duty advantages, works within the normal eight working hours, and receives work on an organized schedule.
External Assessment for the Finance Director
The external analysis begins with an examination of the national average pay and benefits for the position of director of finance. On average nationally, director finance in a food production company earns a basic annual salary of $101,344 and $9,655 as direct bonuses at 25% percentile.
External Assessment of the Labor Market
Labor market across the United States require a series of independent organizational analyses to determine the most appropriate workforce that can suit a specific professional position (Bloom & Reenen, 2010).
When a professional job position receives considerable attention within the local labor market, the possibility of high compensation and benefit is inevitable (Bloom & Reenen, 2010). American food processing companies have been using different compensation strategies to their employees, depending on the organizational setup and the HR practices of individual organizations (Economic Research Institute, 2014).
From a general perspective, food-processing industries have just begun improving in the United States, and companies are now focusing on food products. Demand to control such organizations has offered opportunities of different kinds within food processing companies, including finance managers, accountants, and finance directors.
The American market dealing with retail products is still expanding, and many firms are accommodating the position of financial planners and managers to avoid a financial crisis that may arise from money mismanagement. Currently, only about 203 job positions are available for the finance directors in about 520 American food-processing companies (The United States Bureau of Statistics, 2014).
This accounts to The American bakery, the food-processing industry is still a growing industry, and the whole foods industry is as well a young industry with different opportunities.
Finance management profession in the United States still on demand (Faulkender et al., 2010). As institutions consider the profession to have little student enrollment due to its complexity, the areas of financial planning, accounting, and economics normally become highly demanded in their profession. The local labor market for the position of finance director across the United States is still in its preliminary stage such managers in their organizational structures.
The rate of graduates with expertise in financial management is still depreciating with is professional value increasing. The market for the position of finance director is still high, with companies requiring highly skilled individuals to advise them on proper investment, financial planning, and financial building (Faulkender et al., 2010). There are currently few finance directors in America as the professional requirements to engage in the profession are relatively high.
Companies are still seeking experts in the field, and this explains the reason why many food-processing industries are offering high payment and compensation package for the position. According to Bloom and Reenen (2010, p. 221), “firms in highly-skilled industries and with lighter labor market regulations, focus relatively more on incentives/people management than on monitoring.” America is a diverse labor market that is contently pulling skilled workers towards its major cities from within its regions and all over the world.
Salaries and benefits are part of employee retention strategies in several organizations, and the Retail Bakers of America have been practicing the same. Salaries, gifts, incentives, promotions, and cash rewards are part of a compensation strategy that firms are using to retain finance directors and other workers in America.
For other organizations, to make the profession worthy and attractive, they are increasing their pay packages to attract the unemployed population, while others are integrating other motivational techniques like reward programs, employee empowerment, promotion strategies within their organizations (Faulkender et al., 2010). Different powerful organizations have come up with high compensation packages to attract financial professionals to work with their organizations as the profession has little qualified personnel.
Projected growth-, the position of finance director at the RBA and similar positions in food processing companies may have a projected growth of 56% over the coming ten years. The food industry in many American states may have a projected overall growth of approximately 43% for the next ten years. To enable the careful balancing of the compensation packages, RBA must understand the expected or projected growth in the next decade.
Recommendations to make the position valuable
It is evident that compared to the average package of benefits offered to several other food processing and bakery organizations across the United States, RBA practices a relatively low compensation strategy to counterparts.
Even though the benefits offered for this position are far much lower compared to several other bakery organizations across the United States, the human resource practices of compensations seem fair to this non-profit organization. However, of much importance is not how organizations should shower workers with monetary compensations, but how they can retain a talented workforce as years of adversity approach.
Many workers seek good workplaces but fail to understand that professional development is becoming more essential in career advancement. Whereas a good compensation package is a critical source of employee motivation and that motivates their professional growth and improves the value of that profession, American organizations differ in their capacity to attract and employ workers (Economic Research Institute, 2014). The higher the amount of compensation package, the higher the demand for a high payment.
The Retail Bakers of America (RBA) stands out as an independent national organization that aims to improve the welfare of retail bakers by making the industry competitive professionally (RBA, 2011). High payments may be detrimental to them.
Whereas it is important to consider paying employees well to keep them motivated and improve their professional growth, focusing on non-financial professional growth strategies is important (Zingheim, Schuster, & Dertien, 2009).
The position of Finance director is not autonomous as it relies on the HR processes and the decisions made from the top management. Despite offering a relatively average salary and benefits package for finance directors, a new strategy of compensation may be imperative to RBA. The company should integrate a comprehensive professional development strategy that should focus on building the professional capacity of the finance directors.
Professional training and development as a paramount aspect of the programs are one of the most important strategies of compensation that RBA should adopt (Zingheim, Schuster, & Dertien, 2009). While managers or workers can grow financially, their professional development is important than their financial growth.
This is because the fields of finance, accounting, and business economics, which form part of the requisites for the finance directorship position are ever-changing and coming up with new challenges (Zingheim, Schuster, & Dertien, 2009). RBA organization seeks to enhance workers’ professional standards. Thus, offering further professional growth opportunities may deem most appropriate for the RBA and finance directors.
The main recommended professional development plan
Training, being part of professional development, the RBA organization should take its finance director for a Certified Public Accountancy (CPA) course to enhance accounting competence. CPA is the topmost recognized accountancy qualification for the accountants in the United States and internationally. CPA certification will enhance the professional growth of the finance director, nationally and internationally. The following is a cost-benefit analysis and the recommended timeline for the implementation of the intended plan.
Timeline and estimated cost for implementing the recommended plan
Professional development (CPA certification)
Cost-benefit analysis
Assessment of the Developed Plan
Any plan must have a means of achieving the stated goals or objectives as experts in the strategic management argue (Zingheim, Schuster, & Dertien, 2009). A strategy is fruitless without proper plans to accomplish it. Since members are unable to analyze the progress of the intended plan on their own, RBA will have to choose autonomous assessors within the company and outside. The chosen assessors should engage their studying director in professional competency assessment to analyze skills achieved in every learning session.
RBA should keep introducing new techniques for assessing professional levels of their director on a training program to examine the progress and success of the professional development plan (Zingheim, Schuster, & Dertien, 2009). The assessors will devise means of taking regular performance-based appraisals to examine the level of professional growth among the finance directors, compile progress reports, and recommend necessary actions.
Conclusion
The capacities of corporate organizations to compensate their workforce differ depending on operational techniques. Whereas financial compensation strategies and packages are essential motivators to many organizations, growth in the trend of high compensation packages may set organizations to bankruptcy. When employees get used to rising payment packages, their demands for salary and compensation increases with time, and this may negatively affect organizations.
Many organizations have employee compensation strategies that support and improve the welfare of employees. RBA is an organization that intends to improve the professional standards of retail bakers. Although compensation strategies are essential for the survival of an organization, cost-effective benefits are more vital.
Considering the most appropriate benefits for employees that are essential for their survival and benefits that mostly promote their professional growth rather than economic wellbeing is crucial to any company that understands the modern economy.
Considering the unsteady economy that continues to affect growth and already established firms, it is important to compensate employees through professional development techniques. Taking the directors for a CPA certification will be appropriate for the professional development of the finance director.
References
Bloom, N., & Reenen, J. (2010). Why Do Management Practices Differ across Firms and Countries? Journal of Economic Perspectives, 24(1), 203–224.
Economic Research Institute (2014). Salary and Costs Comparisons. Web.
Faulkender, M., Kadyrzhanova, D., Prabhala, N., & Senbet, L. (2010). Executive Compensation: An Overview of Research on Corporate Practices and Proposed Reforms. Journal of Applied Corporate Finance, 25(1), 107-118.
Retail Bakers of America (RBA). (2011). Who We Are: Information on the Retail Bakers of America. Web.
Salary: National Averages: Finance Director. (2014). Web.
The United States Bureau of Statistics (2014). Job Openings and Labor Turnover. Web.
Zingheim, P., Schuster, J., & Dertien, M. (2009). Compensation, Reward and Retention Practices in Fast-Growth Companies. World at Work Journal, 18(2), 22-39.