Assignment 2: Compensation Plan Outline Due Week 8 and worth 300 pointsUsing the same company you researched in Assignment 1, evaluate the company’s compensation plan to determine how it could be im

Assignment 1: Compensation Practice

Compensation Management

April 29, 2019

Company Background

Suwon is the capital of South Korea, where the headquarters of Samsung Electronics, one of the renowned multinational organizations are situated. Samsung Electronics is a subsidiary of Samsung Group that had. Mr. Lee Kun Hee founded Samsung Electronics as a publicly trading company in the mid of 1969. The business operations of the company now have expanded to about 80 countries of the world where they have been employing to more than 300,000 individuals. The two major products that make Samsung Electronic a promising brand in the eyes of customers are televisions and mobile phones; even Samsung is considered one of the most influential competitors of Apple Inc. relating to their Android phones. The other products of the company include home appliance, fridges, laptops, computers, and various electronic accessories. Since the organization operates as a multinational organization diversity and strong CSR some of the key elements that distinguish Samsung Electronics from its competitors. The diverse workforce is equally entitled to observe and follow their religion, norms, and values staying within the wide corporate culture of the organization. The reason for the company being innovative is just because of its diverse workforce (Samsung, 2019).

Compensation Strategy

Salaries and wages are the main strategies that Samsung Electronics practices in terms of compensating its employees. The salary is associated with the designation of an employee linking their job responsibilities and other special tasks. There is a common practice of non-compensation benefits that Samsung Electronics offer from time to time to their employees based on their new performance. They do so to motivate their employees and create an environment of competition to engage other employees. The company requires its management to remain sturdy to keep employees satisfied and happy because the company considers its employees an asset which contributes to the growth and success equally (Risher, 2015). It is true that a satisfied employee performs the duty of two employees.

The HR management of Samsung Electronics continuously works to keep the company's compensation plan competitive to retain their employees. For this reason, they analyze the compensation both monetary and non-monetary that right compensation is there for their employees. The organizations where weak and rigid compensation is offered to their employees soon become the high employee turnover organization (Burrow, Kleindl & Everard, 2008). The employee turnover especially when it is high brings lots of associated cost in terms of recruiting, consultancy charges, and training of new employees. Apart from monetary costs, there is wastage of time, delay in operational process, and sub-standard quality that ultimately diminishes the overall reputation of the organization.

Challenges of Samsung Electronics relating to Compensation

Even though Samsung Electronics offers good competitive compensation to its employees, there are some challenges associated with the compensation plan of the organization. The first and foremost challenge is related to employees' health. The employees of the company particularly working on plant site have been alleging company for causing cancer. It is true that some of the reported cases which were not highlighted enough due to the company's access in political elite disclosed employees who had deceased due to leukemia, an intensive form of cancer; however, like other companies, Samsung Electronics kept it apart from taking any such health responsibility that employee might have developed while performing their job on the plant site.

The practice of different compensation standard to different employees in different countries is another challenge that Samsung Electronics has been facing. The company has not a universal compensation standard to be applied to all eighty countries where it is operating in any form. The local labor laws, political situation, economic condition, and influence of decision-makers all come in the middle while making a compensation plan for those employees. The countries where there are strict labor laws, and thorough monitoring of employees’ related issues, Samsung keenly follows those rules and regulations, but in developing countries where there is no check and balance, the rights of employees are always exploited by organizations and Samsung is also in the lane of such organizations (Dudovskiy, 2017). But apart from all the facts, the company truly makes efforts to ensure that there should be some minimum protocols available universally relating to compensation so that the company could strengthen its claim that it considers its employees an asset.

Compensation and its impacts on Company and Stakeholders

The role of compensation in the success or failure of an organization is equal. When there is a good compensation for employees, there is growth and success of the organization and vice versa (Risher, 2015). The HR department of any organization work throughout the year to keep the compensation plan level to help company motivate and retain its employees. The positive impacts of compensation bring prosperity, better living standard, and motivation for employees, growth, and success for the organization, and competitive dividend for shareholders. The negative impact associated with compensation cause employee turnover, disputes, and disagreement for employees, low production, increased cost, legal consequences for the company, and low return for shareholders.

It is obvious that a company cannot keep all the stakeholders happy at the same time. Employees and management always try to attempt to grasp more and more for their benefits, shareholders have the concern with their dividend, the company wants to maximize its profit and growth, and consumers seek to get quality product or services at a low price. A good compensation plan is something that ensures employee's motivation, maximizes their productivity that ultimately provides quality product or services to customers (Burrow, Kleindl & Everard, 2008). A monthly-based salary approach sometimes brings various disadvantages such as absenteeism. People love to work on an hourly basis since they know they will earn for whatever time they consume at work. Hourly wage rate motivates them and invokes them to bring improvement in their working performance. Monthly salary seems to be practical but some of the employees without working properly according to allocated daily time receive the same salary at the month end as an employee who serves the company properly on the schedule allocated for his daily work. This decreases the morale of the latter employee and ultimately reduces his productivity towards the growth and success of the organization.

External Factors Affecting Company Compensation Strategy

Both the internal and external factors are equally important to make the company’s compensation plan competitive and attractive (Risher, 2015). The external factors such as labor laws, unions of labor, and the overall market condition influence the compensation strategy of any organization, and Samsung Electronics is also influenced by these external factors that sometimes create an unavoidable circumstance for the company resulting disagreements, strikes, and legal implications. One of the basic reasons behind the formation of labor unions is to ensure that the rights of labor are not exploited, they are reasonably compensated, the workplace is safe and favorable, and they should be compensated in case of any incident accordingly. So, a strong labor union always succeeds in getting their demands fulfilled by the employer. Otherwise, they may strike, stop work, and take the company to the court. The main purpose of forming the labor union was to ensure that employees were equally paid according to the performance of their job, and their health and safety at the plant site was equally important as the growth and success of the company. That is the reason, the employees of Samsung Electronics forcefully formed labor union in 2013 claiming that their basic rights were exploited and they had been poorly compensated by the company.

When there is a lack of research and market survey on employees' compensation the company is usually unable to provide equal compensation facilities to its employees as compared to their competitors. Organizations which conduct extensive research to determine the compensation program for their employees; that is a genuine, complete, and accurate compensation program. Market research is another external factor that should be taken into account while formulating a compensation plan. The economic, political, and environmental conditions keep changing, and employees' compensation should be designed to keeping all these factors on the table (Risher, 2015). Thorough market research on compensation will enable Samsung Electronics to retain highly skilled and talented workplace with them offering a competitive compensation package.

A thorough study on the local labor laws and other labor-related matters is very important for a multinational company while starting its operation in another country. The labor laws are formulated under the supervision of the current government for the protection of labor to prevent them from their exploitation. Though industrial laws are in favor of organizations the practices and impacts of labor laws are entirely different that hardly favor an organization. In the event, the laws relating to labor are violated the organization has to face the consequences according to the violation of the law. Sometimes the intensity of punishment is too high compelling a company to stop operation and quit from the country, but it hardly happens in the modern business world due to availability of information, technology, and corporate culture.

Effectiveness of Traditional Bases for Pay

The HR management of Samsung Electronics keenly practices its traditional base pay for its employees. There are various small tools that are attached to the compensation program such as employees are paid based on their performance, length of service, and their overall attitude. A competitive reward system is also there that compensate those employees who perform extraordinarily; this not only increases their motivational level but also sets an example for others to give their best. The traditional third base for pay is promotion. The concept of promotion in any organization is very important since it realizes existing employees that they are equally important for the company. The thorough promotion program at Samsung Electronics ensures that existing employees are accommodated on senior posts based on their performance that creates room for juniors to take up the vacant position. Diversity at Samsung Electronics is another traditional base for pay since it confirms that employees belonging to a different culture, language, race, color, and ethnicity work together just because of good compensation they receive (Dudovskiy, 2017).

The employees of Samsung Electronics are overall satisfied with the policies of the organization. The turnover of an employee at the organization is equal to none that makes Samsung Electronics a responsible organization in terms of employees' retention. The organization regards its employees as an asset, and the employees have the feeling that they are equally treated. When a company considers its employees valuable, the employees in return contribute what the company expects from them. Only an efficient, effective, and competitive compensation plan can help an organization maintain minimum turnover. High turnover in any organization brings lots of challenges for the company in terms of cost, time, and legal matters. Samsung Electronics is a responsible organization that ensures that the employees are not exploited and their rights are thoroughly regarded in both monetary and non-monetary terms.

References

Burrow, J., Kleindl, B., & Everard, K. (2008). Business principles and management(3rd ed.). Mason, OH: Thomson South-Western.

Dudovskiy, J. (2017). Samsung Corporate Social Responsibility - Research-Methodology. Retrieved from https://research-methodology.net/samsung-corporate-social-responsibility/

Risher, H. (2015). Employers Need to Invest to Strengthen Performance Management. Compensation & Benefits Review, 47(2), 55-59. doi: 10.1177/0886368715586302

Samsung. (2019). About Us | Samsung US. Retrieved from https://www.samsung.com/us/aboutsamsung/home/