INDIVIDUAL ASSIGNMENT
COMPENSATION MANAGEMENT-MGT (422)
Section – 1
Fall 2021
Submitted By
MD. Saidul Islam Chowdhury
ID – 17204032
Submitted To
Mr. Zaheed Husein Mohammad Al-Din
Senior Lecturer
BRAC Business School
BRAC University
Date: December 22, 2021
Q1. What are the strengths and weakness associated with the total rewards model components
that are being offered at CEL?
Ans: CEL, a Canadian Indian corporation that provides pressure equipment to clients all over
the world. Pressure equipment, for example, are containers that hold liquids or gases at variable
pressures under various situations. The rewards model's components of CEL are: basic wage
and bonuses, long-term incentives, amenities such as pensions and vehicles, the physical and
cultural working environment, and leadership. It is a fantastic approach for a company to
consider supplying employees with items they value. But it is not free of drawbacks.
Now I will discuss some of the major strengths and weakness of CEL’s total reward model
below,
Strengths:

Dividend Payments: Employees receive a part of the profit and DPSP in addition to
their usual salary. These profit shares encourage employees to be more engaged in their
work, which ultimately aids CEL in meeting its objectives.

Personal Development Opportunity: CEL provides a variety of training courses to
help employees improve and enhance their abilities. All personnel receive on-the-job
training, cross-training, and external training. The company also provides its employees
with all of the required strategies, skills, and expertise to help them advance in their
professions. The company encourages employees to attend a job-related course and
pays for all tuition and study materials. All of these criteria provide the employee's
confidence in their jobs and future career chances.

Long-Term Disability: CEL provides employees with LTD 75% of their usual
monthly salary. It can go up to $6000 per month.

Social Development Opportunity: CEL organizes a variety of activities to foster a
strong link between employees and the business. This includes the annual Christmas
dinner, the children's Christmas party, and several team-building activities. These
gatherings allow workers to get to know one another better and strengthen their bonds,
which will benefit them in the future while working on group initiatives.

Health Care Benefits: CEL also covers the healthcare costs of its employees and their
family members. It includes prescription drugs and paramedics such as chiropractors,
massage therapists, physiotherapists, naturopathic physicians, podiatrists, speech
therapists, and acupuncturists.
Weaknesses:

Uncertainty with Dividend Payments: The organization's base pay is not very high.
As a response, the organization provides dividends to all of its employees, but the payouts are unclear because the profit is dependent on the firm's success. As a result,
employees are concerned about how much profit they will earn, which impacts their
job performance.

Lower Base Pay for the Engineers: Engineers at CEL are paid at a lesser standard.
Employees do, however, earn a portion of the organization's profit in addition to their
regular salary. Some CEL employees, however, would have preferred a larger
compensation. Because profit-sharing income isn't reliable enough for them, it is
always dependent on the company's profitability.

Lack of Power and Control: In this context, power entails the ability to make
decisions, as well as some oversight of aspects that impact the ultimate outcome, as
well as the autonomy to carry out decisions in the absence of top management. Many
employees find these things to be highly motivating. CEL does not provide its
employee's adequate opportunities to participate in decision-making. Employees at
CEL will be more responsible for their work if they have a sense of authority.
Q2. Using the compensation data provided in case Exhibits 1 and 2, determine whether a case
can be made for meeting Grubb's salary expectations.
Ans: Analyzing Exhibits 1 and 2 below,
Exhibit 1:
Using Exhibit 1 data for meeting Grubb’s salary expectation is very hard. Because an engineer
with less than five years of experience receives an average base wage of $78000, according to
the exhibit. Aside from that, an engineer with five to ten years of experience earns $85000 per
year. Finally, an engineer with ten to fifteen years of experience earns $96,000 per year. Mr.
Grubb, on the other hand, has just seven years of experience and has asked for a base salary of
$90000 to $100000. According to CEL's average base wage policy, Mr. Grubb is predicted to
receive an average salary of CA $85000. As a result, if the corporation follows exhibit one, it
will fall short of Mr. Grubb's expectations.
Exhibit 2:
On the other hand, using Exhibit 2 data for meeting Grubb’s salary expectation is possible.
Two polls of engineer wages are given in the second exhibit. According to the first poll,
engineers are given a basic salary ranging from $70600 to $95000. Moreover, in the second
poll, engineers receive total monetary pay ranging from $73700 to $101650. And the average
is $89100. As a result, if CEL considers the first survey to approve Grubb's desire, the
organization may accept it. Because the maximum base wage for an engineer might reach
$95000. Similarly, the biggest overall remuneration for an engineer, according to the second
poll, is $101650. If CEL chooses to go with the second poll, they can also accept Mr. Grubb's
offer. As a result, if the organization adheres to these compensation polls, Mr. Grubb's
expectations can be realized.
Q3. Analyse each of the three main options outlined at the end of the case (see "Decision
Time"). What are the consequences of each of these courses of action?
Ans: The consequences of the three actions are given below chronologically,
1. Offer Grubb the job at a lower salary (decision number one):

Grubb may decline the job offer.

Grubb may first accept the job but leave the company for a better offer quickly.

Grubb will accept the job but his performance will not be up to the mark because of
lack of motivation.

Grubb might not follow the company values.

The organization might need to go back for recruitment program for finding another
suitable employee.
2. Give Grubb the salary he wants (decision number two):

Other engineers may sense inequity/unfairness.

This may result in lower work satisfaction.

Productivity of the other employees might reduce.

Employees may grow dissatisfied and leave the company.
3. Completely revamp the compensation system; increase salary levels for all engineers
(decision number three):

This will increase the production cost of various products of the organization.

Organization will see less profit compared to the previous years.

It will increase the risk of bankruptcy during the lean years.

Because of the lack of profit investors will invest less on the business.

As a result, company might lose market share.

Because of extra pay, employees may lose interest in their professional development.
Q4. Which of the three main options would you recommend Arvidson follow? Develop an
action plan consistent with that option.
Ans: My Recommendation: I will recommend Arvidson to follow the first main option (Offer
Grubb the job at a lower salary). After considering all of the possibilities and weighing the
advantages and drawbacks I have found that employees want firms with a good compensation
system that matches their wants. Employees are drawn in by more than just their salary. An
employee who enjoys taking challenges might want to work for a company that compensates
employees depending on their individual performance. An employee with the opposite
attribute, on the other hand, prefers to work for a company that pays less based on performance.
As a result, the base wage is not the only element influencing an employee's decision to work
for a specific firm. So, when base pay is out of the discussion, the first main option becomes
the best option containing very few cons.
My Action Plan for Decision Number One: The organization's reward system model must
be changed to entice Mr. Grubb to work for CEL at a low base rate. The qualities of the
organization's incentive structure must complement Mr. Grubb's needs. He is a highly talented
and qualified candidate; therefore, the company may use an individual incentive approach in
their remuneration system to persuade a good candidate like him. They may start paying the
individual based on their performance. One advantage of this remuneration scheme is that
employees who perform poorly are more likely to leave the company because it is not in their
best interests. High-performing employees, on the other hand, value this strategy since it
recognizes and rewards their efforts. This encourages them to put forth extra effort. The
company may be able to persuade the candidate that, while the base salary is lower than what
he wanted, the pay structure is a suitable match for his personality. As a result, if Grubb works
well, he will finally be able to earn his targeted salary. CEL's incentive program also includes
benefits such as various forms of insurance, profit-sharing policies, promotion, and
development policies. Mr. Grubb may accept the offer if all of these perks give him a sense of
safety in the profession.
Q5. Moving forward, what do you recommend Arvidson do to ensure that he is getting full
value for the compensation and reward package being offered at CEL?
Ans: Arvidson spent some time getting to know his employees in terms of their remuneration
preferences in order to obtain a better understanding of them. As a result, he discovered that
the team represented a diverse spectrum of viewpoints. Some of them believed that money was
the most important aspect, however many others acknowledged that professional life is about
much more than just making good money.
To ensure that Arvidson is getting full value for the compensation and reward package being
offered at CEL, I recommend him to follow the suggestions given below,

Pay for performance: When an organization begins to compensate employees based
on individual performance, lousy performers are more likely to leave. Which is most of
the time advantageous to any organization. As a result, if CEL incorporates individual
incentive systems into their compensation plan, their organization will profit from
increased employee engagement.

Proper Recognition: Employees feel valued when their efforts are recognized, and this
sense of gratitude motivates them to continue working hard. For this, the corporation
may offer specific incentives for good performance, such as increased authority.

Ensure Strategic Alignment: Arvidson has to make sure that, future organizational
decisions are in line with CEL's vision, values, objectives, and strategy.

Employee Survey: Arvidson has to survey employees’ needs and wants regularly to
keep productivity high.

Performance evaluations: Make use of biannual performance evaluation method to
evaluate employee performance more than once a year.

Providing Feedback: Arvidson should introduce a feedback giving system where after
the performance evaluation of the employees, they will be informed about their
shortcomings and will be instructed about the ways to overcome them.

Dividend Pay Reduction: As the dividend payment method has some uncertainty,
Arvidson can reduce the dividend payment percentage from the total payment system
and increase base pay in place of the reduced dividend payment.

Rising Employee Awareness: Arvidson has to ensure that CEL workers are better
aware of the various components of the overall award program.