Case Study on Henderson Printing- Management and Compensation styles

Executive Summary

The current managerial style at Henderson Printing somewhat lacks a proper structure. The company is a medium-sized manufacturer of a various types of ledgers and record books. Although the owner strives towards offering the best quality of books, issues in the company exist because of the managerial style of the owner. After analyzing the case study, it can be inferred that the owner follows the Laissez-faire method of management. The management style is quite ineffective in comparison to autocratic or even democratic styles (Pahi, 2017). George is the owner of Henderson Printing. He is solely responsible for looking after the operations of the firm. The firm lacks specialists or supervisors in areas such as human resources, marketing, accounting and production. Consequently, George is obligated to handle all the firm-related issues himself. However, expecting George to manage every single aspect of the printing business has led to the downfall of the company. Employees and supervisors turn towards him for advice, help or guidance. This, in turn, puts a lot of pressure on George as he lacks expertise in all areas. Moreover, the managers are least likely to participate in the activities of the firm. It has severely affected the service quality of the company.

Reward Strategy

In an organization, the reward strategy outlines the monetary along with the developmental rewards that employees receive after achieving the specific objectives of the organization (McLarney & Hansen, 2016). It includes benefits, along with compensation. The purpose is to motivate the workers to perform effectively. At Henderson, the pros and cons of the existing reward strategy have been outlined below-

Compensation Analysis – Current Reward Strategy

The reward strategy at Henderson Printing is completely informal. Employees are rewarded based on their degree of association with the owner of the firm. Based on the attitude and previous relationship with the owner, they are rewarded. It can be stated that the reward system has affected the morale of the neglected staff. For instance, they might have performed well throughout the year; however, they have not received the reward they deserve. In a productive organization, rewards must be given based on performance alone. Any kind of biased behaviour leads to the downfall of the firm. However, George has attempted to compensate sick employees during tough times. Nevertheless, the lack of formal reward structure has hampered the reputation of the firm.

Compensation Analysis – New Reward Strategy

The new reward strategy can be employed by Georgette to create a fair and bias-free payroll system. She must consider the performance level of employees rather than the degree of association with employees. The new strategy might include the following elements so that productivity of the firm increases-

• Variable pay- It can be regarded as part of the new reward strategy, and it mainly includes good incentives for the overall performance of the employees. Therefore, alternatively, it is known as “pay-for-performance” (Kuvaas, Buch & Dysvik, 2018). It is based on the accomplishments of the individuals, along with the performance of the business unit. It can stretch the productivity of the employees, and they might find it a healthy challenge.
• Group-based system of reward- By employing this technique at Henderson Printing, it would be possible to motivate the entire team to work towards a common goal. This would increase the cooperation levels among individuals and departments. The performance of the entire team should be considered. Recognition should be given to the under-performing as well as the average-performing employees for their efforts.
• Launching recognition programs- It can be regarded as an extra effort, and it can be effective because employees seek approval and recognition for their hard work apart from monetary benefits (Conley, 2017).

Hence, by keeping these elements in the new reward strategy, it would be possible to create a structure for the present reward system. Employees are likely to stay loyal for the long term.

Compensation Mix and Related Measures of Success

Compensation strategy or mix mainly includes certain elements such as benefits, salary and incentives. The compensation mix can enhance the ability of the company to motivate, attract and, most importantly, retain a large number of employees. The nature of salary is stable, and an increase in the salary level can motivate a lot of employees to perform better. Apart from that, certain elements such as incentive pay, base pay and indirect pay can enhance the performance of workers at Henderson Printing. The purpose of creating the compensation mix is to reward the deserving employees for their constant efforts and uninterrupted services.

Indirect pay- In this case, elements apart from the basic salary is considered to retain employees. For instance, pensions, benefits and health insurance schemes fall under the category of indirect pay (Lee & Sun, 2017). At the Henderson Printing, a provision for indirect pay must be present so that sick workers do not feel helpless during tough times. George’s efforts are consistent towards his sick employees. He offers monetary aid to the families as well. The need of the hour is to formalize the system.

Incentive pay- One of the vital components of the compensation mix is the incentive pay. It can act as a motivational tool, and the productivity levels of workers at the printing house can be enhanced. For instance, employees who tend to work additional hours expect a certain level of “extra pay” (Sierpińska-Sawicz, 2018). Incentives can either be a financial remuneration or a non-financial remuneration. The purpose is to retain the employees even if they are considering other career options.

Base pay- It is one of the basic requirements and alternatively known as the initial pay. In the case of base pay, bonuses and health benefits are not included.

The rationale for the compensation mix

In the printing firm, the three elements mentioned above should be included so that the owner is able to retain the employees for a long term. Since the firm lacks a proper compensation structure, it would be effective to include the base pay. Similarly, incentive pay and indirect pay would motivate workers to perform better.

Figure 1: Vital elements of compensation mix

(Source: sec.gov, 2020)

Goals for the Reward and Compensation System

The newly prepared compensation and reward system would help the enterprise achieve specific organizational goals. For instance, the following goals can be achieved-

• The talented candidates can be retained
• Specialists in areas of accounting and HR can be attracted with the help of brand new compensation and reward system
• The motivation levels of employees would be boosted as they would feel appreciated for their efforts
• The ROI of the firm can be optimized

Legislative Act

The Canadian government will implement the Pay Equity Act across all Canada-based firms, and it can be applied in this case study as well. It would ensure equality of pay among all kinds of workers irrespective of their gender, race or colour. After implementing the Act, it would be possible to regulate the outcomes in the workplace (Smith, Layton & Stewart, 2017). It would be a proactive measure of the ill-treatment of individuals.

References