Career Development Summary

Compensation Plan
Mindy Isaac
March 22, 2010

Compensation Plan

The merger of InterClean and EnviroTech creates a new direction of service that will make InterClean a leader in the cleaning and sanitation industry.   Achieving new strategic initiatives requires the development of a compensation plan to attract, motivate, and retain an intellectual and exemplary sales team. The new compensation plan is a total rewards package for employees consisting of three components, a fixed salary and traditional benefits package, an incentives package, and a work-life balance package reviewed annually as the company expands. The following paragraphs explain the success, components, and benefits of this plan.
Before InterClean can implement a compensation plan, the company must consider areas of fairness, assign a monetary value to each job, and create a procedure for increasing the employee’s base pay rate. The objective when instituting the new pay system is to update job descriptions, create a job evaluation method, conduct pay surveys, and develop a pay structure (Cascio, 2006).   The plan will contain a variable pay structure based on either a market-based, or competency-based pay system.   The fixed salary component is based on a market-based pay system whereas the incentives package is based on a competency-based pay system.   Companies providing variable pay to their best workers are 68% more likely than other firms to report outstanding financial performance (Cascio, 2006).

Success of the compensation plan

To be successful, a compensation plan will be designed to increase motivation and recognition thereby improving the performance of the sales team.   Properly designed incentive programs work because they are based on two well-accepted psychological principles: (1) increased motivation improves performance and (2) recognition is a major factor in motivation (Cascio, 2006, p. 437).   Management is committed to the implementation of the plan and...