Compensation Plan Outline

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nterra15

Business Finance

Compensation Management BUS409

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Using the same company you researched in Assignment 1, evaluate the company’s compensation plan to determine how it could be improved.

Write a six to eight (6-8) page paper in which you:

  1. Evaluate the existing compensation plan to determine if it is the most appropriate for your company. Explain your rationale.
  2. Determine the most beneficial ratio of internally consistent and market consistent compensation systems for the company you selected.
  3. Evaluate the current pay structure used by your company and assess the recognition of employee contributions.
  4. Make two (2) recommendations for improving the effectiveness of the discretionary benefits provided by the company you selected.
  5. Evaluate the types of employer-sponsored retirement plans and health insurance programs provided by the company you selected and compare them to that company’s major competitors.
  6. Use at least three (3) quality references. Note: Wikipedia and other websites do not qualify as academic resources.

Your assignment must follow these formatting requirements:

  • Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; references must follow APA or school-specific format. Check with your professor for any additional instructions.
  • Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required page length.

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Running head: BMW 1 BMW Anthony Green-Powell Professor Marilyn Fitzpatrick Strayer University BUS 409 Compensation Management January 28, 2018 BMW 2 BMW company overview BMW of North America, LLC (BMW NA) was initially founded in 1975 as the United States major importer of BMW’s performance vehicles. BMW NA took up shipping and dispensation responsibilities for the BMW motorcycles in 1980 as well as the distribution of light trucks in 1999. BMW of North America has its corporate headquarters in Woodcliff Lake, New Jersey: Regional Headquarters and Technical Training Center of the eastern region in Woodcliff Lake, New Jersey. The Vehicle Preparation Center in Port Jersey, NJ, and finally, has a Regional Distribution Center in Nazareth, PA. The company’s international headquarters is in Munich Germany. BMW is a luxurious product offered at a premium price. The company’s mission statement is one that promises exceptional customer experience. BMW has been rated as the most maintained automobile manufacturer globally. The company is built on providing efficient vehicles that reduce consumption and emission rates by as much as 30% (Company information). Introduction Compensation strategy is a vital aspect in all business platforms. For an organization to maintain its competitive stance, an effective compensation strategy needs to be employed. Compensation strategy keeps businesses afloat as it provides for the assessment of the businesses finances to determine compensation to be awarded for the tasks being undertaken. Compensation packages can determine what skills the company adopts through the individuals it seeks to hire. Higher packages would therefore demand better skills. In truth every individual seeks to earn high compensation, therefore it is fairly common to find individuals advancing their skills to earn higher compensation. Compensation varies by organization in both the direct and indirect aspects. Direct compensation is inclusive of the monetary rewards awarded to individuals for the BMW 3 performance of a task. Indirect compensation, on the other hand, includes benefits, and discounts amongst other benefits that the company may seek to offer. This paper investigates BMW and the compensation strategies it employs as well as the challenges faced. The paper will delve into the manner compensation has influenced shareholders and some of the best practices BMW has adopted that has gained the company competitive advantage. A comparison and a contrast of the compensation factors such as labor laws, unions, and the relative market trends, will also help in unearthing more challenges. Compensation strategy and related problems The Supervisory board in BMW is mandated the task of determining and reviewing the board of management’s compensation while the personnel committee undertakes the role of preparing the process. The principles of compensation are that the work force is encouraged to foresee development at BMW. The principle of consistency in granting remuneration is considered in different levels at the BMW Company: for this reason, they contain similar structures and components. The supervisory board ensures that the board of management has ascertained that all the compensation and components therein are up to par always. Therefore, the board of management is not required to take risks on behalf of the BMW Group. The compensation model formulated for the board of management attracts highly qualified executives while the compensation of members in the board of management is determined by the performance criteria based on the remuneration they receive as well (Schmitt, Zacher, & Frese, 2012). The compensation of the board of management can either have aspects of fixed and variable remunerations and a share-based component. Retirement dependents also gain BMW 4 entitlements. Fixed remuneration comprises of salary that is often paid monthly with remuneration elements such as company cars, insurance premiums, security systems and medical check-ups. The members of the Board of Management can make vehicle purchases of the BMW Group with strict conditions. The variable remuneration by the board of management members is made up of variable cash remuneration and a share-based remuneration. The bonuses at BMW then comprise of corporate earnings-related bonus and a personal performance-related bonus. Equal consideration is granted based on personal performance, the decisions made in forecasting periods, as well as the key decisions that affect the future development of the business. Performance factors include innovation, customer focus, adaptability, leadership, and contributions of an employer, as well as elements that promote corporate social responsibility (Schmitt, Zacher, & Frese, 2012). BMW best practices BMW has concentrated more on digitalization, modifying their products as per customer requirements, the implementation of regulatory requirements, volatility, as well as the introduction of new technologies and Services further enhance on the group successes. To ascertain its stance in the competitor market and uphold its vision of remaining steadfast and inspiring people, they have created a competitive advantage through providing attractive services to its customers. The company’s strategic approach in branding and designing has contributed greatly to the new era and ensuring profitability. The creation of desirable brands is propelled by the company’s brand management as well as the exceptional designs it offers. In addition to this, BMW has also gone the extra mile in making a vehicle that offers a scan of the surrounding areas. Technologies that facilitate this include a stereo front camera, full-Range radar, park BMW 5 distance control, etc. It has also created electric cars that can charge through streets lights to sustain mobility. This action, by far, allows for the company’s models to stand out every time. Compensation practice to determine the positive or negative impact to the company and its stakeholders The influence compensation has on an organization is an indicator of the effectiveness of a fair and equal pay plan. A satisfactory compensation plan contributes to positive work attitude and behavior amongst the employees. This contributes to positive impact on employee cooperation, performance and consequently effectiveness. With this guaranteed productivity and profitability are granted. The supervisory board in BMW is mandated with the task of determining and reviewing compensation plans. Compensation plans are reviewed annually. Competitive strategies at BMW act as a determinant of the compensation of its management, staff, and stakeholders (Samnani, & Singh, 2014). Governance and leadership techniques adopted by the company as well as constitutions set aside for the same reason act as a determent of the impact of compensation of a company. The supervisory board reviews the compensation policy periodically to ascertain that the facts and details included therein are accurate and appropriate. They then approve the benefit policies, incentives, and the overall compensation policy to employees. Annual evaluations are often conducted in order to assess compensation impact on a company. The annual evaluation of BMW’s performance is aimed at acknowledging the efforts of determined executives as well as other employees (Samnani, & Singh, 2014). BMW 6 Compensation-related challenges at BMW Attracting and retaining of employees Rating employee performance is not always an easy task. Effective compensation is a challenge. Compensation management with monetary value is also difficult. There has been an increase in competition in the market for employees is a challenge with different company’s offering different compensation rates and values thereby meaning employees are becoming harder to source. Therefore, the supervisory board often has to review their compensation strategies to ensure they are attractive for employees seeking work in the same industry. Not only is it proving a challenge in attracting employees but also retaining employees who know the compensatory rates of other companies. The increasing demand for competitive salaries and talented has contributed to compensation wars employees therefore meaning that the assessment of BMW’s compensation plans is vital in the motivation of employees. (Wallace et al, 2014). Labor Costs Labor costs become stressful on the BMW’s budget. The BMW Company therefore undergoes economic hardship as a result of compensation wars. Granted the cost of labor escalates to higher levels than employee remuneration which is challenge to BMW and its compensation strategies (Laing, 2011) Multinational Operations As BMW is now a company that operates not only regionally but also globally and has achieved recognition for the same compensation strategies in this regard should have a constant balance but yet meet the needs and expectations of its management team and the employees regardless of the country the subsidiary company is based. Compensation strategies therefore BMW 7 need be in conformity with the local regulations, customs and laws against global corporate policies. Ways in which Laws, Labor Unions, and Market Factors Impact BMW’s Compensation Practices There are many factors that can influence a company’s compensation practices including market conditions, laws and labor unions. The market may call for higher compensation at the time with regard to other competing firms. This could contribute therefore to a company’s inability to pay or delay its employee’s compensations. The number of skilled workers in a market can also influence BMW’s compensation practices. Thus, incentives to revise the compensation practice normally employed will be assessed in the case the company employees under-skilled workers who’s pay is often revised further once they have attained the necessary skills through a job evaluation and performance rating program. Labor Market demand for the supply of labor is a contributor to employee compensation. Low wage is cases whereby the demand is often less labor supply. However fixed pay contributes to higher labor supply. The rate is often decided by what other companies are paying as compensation for the same tasks. This therefore contributes to the rate of production whereby the value of compensation increases with higher productivity. New technology and better management techniques are may contribute to better employee performance, thereby resulting in the enhanced productivity. Labor Unions influence the compensation plans at BMW. The labor unions are formulated in cases whereby the demand is relative to labor supply. For this reason, BMW has sought to create fixed compensation plans to cater for the needs of its employees. Unions often BMW 8 cause a rift in the company’s profitability thereby affecting the company’s compensation rates if profitability is rated at a minimal or lack of it thereof. Labor unions result also wage inequalities. An example of this can be seen in the 2008financial crisis. The U.S. automakers to the precipice of failure, conservatives, notably Mitt Romney made a claim to the United States president at the time Barack Obama’s administration that they should advocate for bankruptcy of car companies. Blame was being put on the high wages that were being paid out to union autoworkers. Labor laws are enforced and implemented by the government with the intent of safeguarding employee rights can contribute to BMW’s compensation practices. These include laws such as the payment of wages act of 1936, the minimum wages act of 1948, the payment of bonus act of 1965, the equal remuneration act of 1976, and payment of gratuity act 1972. BMW group accounts for the ecological and social responsibilities. It takes into account the 10 principles of the United Nation’s global compact. It has also signed a declaration on human rights. The human rights declaration assesses the details of working conditions of employees both in the national and international level. The legal compliance code complies with the legal requirements. Applicable laws include the structure for a binding framework. Violations of these laws attract serious consequences including fines and claims on compensation. Traditional bases for pay at BMW The traditional base for pay is more effective as it centers on matters pertaining to compensation. The approach evaluates whether BMW is offering remuneration to its employees as standards depict. It helps in the assessment of BMW’s equity in terms of payment. This creates a comparison in the amounts of remuneration and compensation that is being awarded to other employees. Traditional base pay foresees the market testing of BMW’s competitiveness in BMW 9 pay scales. Assessing of productivity in the platform is therefore achieved. Though the traditional base for pay quantification does not promise fairness, it allows for dependable systems. In contrast to incentive-based and the person compensation approaches, traditional base for pay results in career orientation, the higher the skills the higher the compensation thereby underrating the performance of employees with admirable talents. BMW 10 References Company information (n.d) Retrieved from https://www.bmwusa.com/about/bmw-of-northamerica.html Laing, D. (2011). Labor Economics. WW Norton & Company. Samnani, A. K., & Singh, P. (2014). Performance-enhancing compensation practices and employee productivity: The role of workplace bullying. Human Resource Management Review, 24(1), 5-16. Schmitt, A., Zacher, H., & Frese, M. (2012). The buffering effect of selection, optimization, and compensation strategy use on the relationship between problem solving demands and occupational well-being: a daily diary study. Journal of occupational health psychology, 17(2), 139. Wallace, A. P. M., Lings, I., Cameron, R., & Sheldon, N. (2014). Attracting and retaining staff: the role of branding and industry image. In Workforce development (pp. 19-36). Springer Singapore.
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Running head: COMPENSATION PLAN: BMW NA

Compensation plan: BMW of North America, LLC (BMW NA)
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Institution
Course
Tutor
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COMPENSATION PLAN BMW NA

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Compensation plan: BMW of North America, LLC (BMW NA)
Introduction
BMW of North America, LLC (BMW NA) has been enabled to attain an unique
competitive edge in automobile industry due to a number of strategic initiatives such as
situational leadership skills, indomitable management of diversified workforce in the United
States of America and Germany, a comprehensive corporate social responsibility program,
effective public relations techniques and above all a flexible and friendly employee
compensation benefits. Generally, employee remuneration benefits include wages, salaries and
other specified benefits that an employee is entitled to in exchange for services discharged on
behalf of the company (Samnani & Singh, 2014). Notably, remuneration benefits may be in form
of hourly, monthly or annual wages plus other additional benefits such as healthcare insurance
covers, disability insurance and retirement benefits. This essay is a comprehensive analysis of
compensation plan of BMW of North America, LLC (BMW NA).
Effectiveness of Compensation Plan of BMW of North America, LLC (BMW NA)
Currently, compensation plan of BMW of North America, LLC (BMW NA) is
determined by supervisory board of the company. The board has embraced the principle of
inconsistency in granting remuneration benefits to all company employees across various
departments (Schmitt et al. 2012). Board of management is answerable to the supervisory board
in ensuring that employee remuneration benefits are up to the standard level. Components of the
current compensation plan comprise of fixed and variable remunerations benefits in addition to
retirement benefits gained through entitlements. Company cars, insurance premiums, security
systems and medical check-ups are some of fixed remunerations benefits (Schmitt et al. 2012).

COMPENSATION PLAN BMW NA

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Also, there is corporate earnings-related bonus and a personal performance-related bonus. In the
process of implementing this compensation plan, the company has embraced the idea of equal
treatment of all employees at personal level.
Welfare employee benefits are fully catered by the company although such contributions
are tax deductible. Majority of company workers depend on employer-financed pension plans
(Schmitt et al. 2012). Some of medical insurance benefits include but not limited to dental,
vision, health and life insurance covers. The supervisory board is dedicated with the role of
carrying out reg...

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