Last updated: July 20, 2019
Topic: BusinessCompany
Sample donated:

It is important for companies to develop a compensation plan for their employees. A compensation plan includes a pay system, health and retirement benefits, work-life balance, and recognition. Compensation should be linked directly to an organization’s strategic plan and mission. With the recent merger and new corporate strategy, it is important to review and update InterClean’s compensation plan. InterClean’s New Compensation Plan Trends in employee compensation are constantly evolving. The New World of employee benefits includes health insurance, employee health and prevention, retirement programs and the 401(k) concept (Cascio Ch12).

The compensation plan for InterClean’s new sales team will include a base salary structure, as well as, incentive-based pay and merit increases. It will also include health benefits, recognition and flexible schedules to promote work-life balance. Performance appraisals will be conducted on an annual basis to provide employees with recognition and opportunities for improvement. These will all provide managers with the necessary information for merit raises. Other recognition opportunities will be developed and available throughout the year.

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These will be used by management or peers to recognize employees for their efforts or contributions to a task or project. Pay System There are two main systems for employee pay: base salary, and incentive-based pay. Base salaries are most often used throughout companies, and consist of fixed salary ranges for each position. Incentive-based pay structures are often used for employees in sales. There are both advantages and disadvantages to incentive-based pay structures. An incentive-based pay system can directly affect sales because the employee’s income is directly related to their performance.

Employees will be more motivated to complete sales. One disadvantage to an incentive-based pay structure is that employees may focus exclusively on completing sales without considering the actual needs of the client. Customer service and relationships may also suffer in this environment because the employee will solely be focused on finalizing sales to increase their salary (Cascio Ch11). I believe that the most successful and practical strategy includes a balance of a base salary and incentives for sales employees. The new sales team at InterClean will receive a base salary, and will be rewarded with commission incentives for new sales.

The reason for this is that the new corporate strategy includes selling packages and plans in addition to products. The new sales team will also be responsible for maintaining customer relationships, providing customer service and assistance, as well as training their clients in new standards and regulations. In addition to the base salary and commission-based pay, we will offer an annual merit program. This will allow for employees to move through the salary range based on performance. Managers will conduct an annual performance review and determine merit increases for their employees.

Total Rewards Package. There are five elements of a total rewards program, which includes programs, practices, and strategies to attract, motivate and retain employees. These elements are: compensation, benefits, work-life balance, performance and recognition, and development opportunities (WorldatWork). Performance and recognition is important all year long. There will be an individual and team appraisal discussed with each employee on an annual basis. A form has been developed for the entire company to use as an employee performance appraisal and review. These will be created at the beginning of each year, and discussed prior to the end of the year.

Team appraisals will be completed by analyzing the success of the team, each employee’s individual contributions to the team, and with input from each team member. This will promote fair and honest reviews of each employee and their contributions. Their peers will be able to praise them for their success and strengths, as well as provide opportunities for improvement. Work-life balance is becoming more important than ever. Aspects of compensation that allow employees this balance like flexible schedules, relaxed atmospheres, childcare and other lifestyle benefits.

These are often considered as important as salaries. According to data compiled by Work-Life Benefits, 90% of 1,000+ employees polled by the Gallup Organization in 1998 said that work/life balance is as important as health insurance (Obringer). Conclusion This new compensation plan will benefit the employees by providing a competitive salary including commission and merit. It is recommended not to put a limit on the amount of commission or recognition that an employee can receive. If an employer keeps it open, employees will continue to produce and strive for excellence.


Cascio, Wayne F. Managing Human Resources, Chapter 11: Pay and Incentive Systems. The McGraw-Hill Companies, 2005. Cascio, Wayne F. Managing Human Resources, Chapter 12: Indirect Compensation. The McGraw-Hill Companies, 2005. Obringer, Lee Ann. “How Employee Compensation Works. ” January 2003. HowStuffWorks. com: http://money. howstuffworks. com/benefits. htm. May 16, 2010. “What is Total Rewards. ” WorldatWork The Total Rewards Association, 2006. http://www. worldatwork. org/waw/aboutus/html/aboutus-whatis. html. May 16, 2010.