MGT5ARP: Advanced Remuneration System and Case Study Essay

This essay provides a comprehensive analysis of advanced remuneration systems, focusing on a case study of The O'Meara Electronic Company. The essay begins by outlining the purpose and relating it to the case study, which involves the company's declining market position and need for improved performance and remuneration management. It defines position-based and person-based remuneration systems, outlining their advantages and disadvantages. The analysis delves into practical strategies for improvement, including budget allocation, salary audits, performance management systems, benefits packages, and structured administration. The essay recommends a person-based remuneration system as the most suitable option for the company, emphasizing its potential to motivate employees based on their skills and contributions. The essay concludes with a summary of the strategies and their potential impact on the company's success.

Running head: ADVANCED REMUNERATION SYSTEM
ADVANCED REMUNERATION SYSTEM
Name of the Student:
Name of the University:
Author Note:

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Introduction
The essay will be constructed by emphasizing on the case study on The O’Meara
Electronic Company in order to gather all the relevant information and to analyze the advanced
remuneration system. The O’Meara Electronic Company is linked with its sustaining high
market share in Australia for twenty years. It is associated with the general electronics sector and
also acquainted with small markets internationally. The company’s position was declining so
they thought of improving their performance management and remuneration system. As being a
consultant of the organization, it is quite necessary to allow a smooth flow of recommendations
for improving the declining situation. A new set of international strategies and implementing
innovative and latest systems in their brand in Melbourne. Therefore, it is required to provide an
adequate solution to the remuneration system and gathering appropriate recommendations in
terms of position-based and person-based systems. Thus, there are a new set of strategies such as
budget allocation, salary audits, performance management system, benefits package, and
structured administration should be utilized for all the employees. The purpose of this essay is to
generate accurate solutions for the organization. As being a consultant, it is an essential
responsibility to manage the organization by improving person-based and position-based
remuneration systems. Now the question arises what type of help or benefit can be provided to
the organization so that the processes can be secured and developed appropriately.

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Discussion
1. Background of O’Meara Electronics Company:
O’Meara Electronics Company has been associated with this business for the past twenty
years and has been successfully occupying high-market status in the industry of electronics in
Australia. It is also occupied with small markets in the international industries. It has been
associated with subsidiaries in South-East Asia and one belonged in Germany for about ten years
back. The company has been appointing electronics engineers and technicians for designing
audio equipment, telephones, televisions, digital cameras, and so on. Other staff members are
appointed in the post for research and development, accounting, marketing, general, along with
the human resource department. The company has been associated with a set of thousand staff
members and only two hundred fifty staff members in Melbourne. The company has been trying
to expand its branches into other European countries.
There was a severe decline in its profit score along with its market position. So a meeting
was held in order to understand the situation and needed an urgent solution to it. Mainly the
performance management as well as remuneration management system was getting affected.
Therefore, some latest and innovative ideas and strategies were required to handle the issues and
to set new recommendations so that the company can arrange an immediate solution to it. Thus,
being a consultant, I was given the responsibility to arrange effective strategies and marketing
tools to rectify the errors and to dissolve the issues without affecting the organization.
It is necessary to understand that where does the problem lies and it was located in the
position-based remuneration system, which will be transferred into a person-based remuneration
system. Therefore, a transformation is needed and it will require an effective strategy to deal

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with such a situation. The whole system is corrupted by employed in undesired positions such as
Joe, a member of the company was awarded but working as a slave. In contrast, Lan, the
supervisor never does proper work as per his position is concerned. Thus, it was decided that
position cannot be changed, but a new system can be incorporated so that they can secure the
company effectively.
2. Position-based remuneration system:
Firstly, a position-based remuneration system is defined as the structure which is focused
on job-based compensation (Shields & Dolle-Samuel, 2015). It is the stereotypical way of
compensation system in which the salary is distributed based on their job or position of a person.
Job-based compensation is also contrasted to skill-based pay that offers an award to the workers
focused on their own level of knowledge and skills (Grobler, Singh & Van Niekerk, 2013). In
short, the salary is distributed for their respective job that will be determined by their individual
responsibilities, duties, and working conditions.
There are some advantages of a position-based remuneration system, and that is: Firstly,
it is focused on a hierarchical organizational structure that is the same for all the organizations.
Secondly, it is quite less complicated than a person-based remuneration system as it will require
more work to define skills, competencies and knowledge (Jayakusuma, Sarumpaet & Dewi,
2018). Thirdly, most of the companies focus on this traditional mode of remuneration system.
Fourth, it allows effective ways for career paths as well as possibilities for gathering promotions
(Shields & Dolle-Samuel, 2015).
Some disadvantages should be considered: Firstly, it is not at all compatible with
incentives along with team-based structures along with fundamental weaknesses (Shields &
Dolle-Samuel, 2015). Secondly, the job holder may not be suitable for the position in the

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organization. Thirdly, higher positions are overpaid than lower positions in the organization.
Fifth, workers are not awarded for their hard-work, knowledge, skills and engagement in their
other activities in the organization (Grobler, Singh & Van Niekerk, 2013).
3. Person-based remuneration system:
Secondly, the person-based remuneration system is referred to as the skill-based
compensation system that offers a reward to the employees by generating additional pay (Shields
& Dolle-Samuel, 2015). The organization always delivers a formal certification to the
employees’ for mastering their individual skills, competencies, and knowledge in the field of
hard-work (Macky & Wilson, 2013). Therefore, the person-based system is highly compatible
than position-based, as it is more focused on the features and capabilities of an individual instead
of their job roles.
There are some advantages attached to this system such as: Firstly, there is separate
payment based on being a senior employee (Shields & O’Leary, 2015). Secondly, in order to
achieve a tremendous amount of incentive one needs to deliver their individual hard work,
dedication, skills, and knowledge in their respective position. Thirdly, it will provide a set of new
improvements in any field of work (Macky & Wilson, 2013).
Some disadvantages are associated with this system including: Firstly, and it will help in
introducing subjectivity in the process of evaluation that will leave all the things resulting in an
inadequate rating (Rodríguez-Ruiz, 2013). Secondly, it gives rise to favoritism. Thirdly, a
difficulty may arise in order to establish, through which competencies will result in developed
job performance and productivity (Macky & Wilson, 2013).

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4. Remuneration system strategies:
Thus, it will help to discuss the practical strategies that will help to develop a new set of
improvements in the organization such as budget allocation, salary audits, performance
management system, a benefits package, and structured administration for all the employees.
a. Budget allocation:
Budget allocation is defined as the strategy that will be associated with the approach of
the organisation to distribute compensation dollars into their beneficial factors and in salary. The
budget allocation will help in determining how much amount of overall compensation budget is
required to spend on the salary structure (Frezatti, Beck & Silva, 2013). In this, a significant
percentage is also required to be spent on beneficial factors, along with other incentives. For
example, suppose a budget for about a thousand dollars for compensation budget, then ninety
percent should be taken as salary budget and ten percent for benefits (Kopytova, 2016).
Therefore, a deduction of seven percent should be allocated to health benefits, two percent for on
retirement savings, and lastly, one percent should be allocated to tuition reimbursement. In this
way, the budget allocation will help to maintain dollars to be spend and benefits will be attained
in order to control health care, labor, and other respective benefit costs.
b. Salary audits:
Salary audits are structured through market change and therefore, it is more significant to
perform daily salary audits so that the organization can get assurance regarding the range of the
salary. It will definitely reflect on the latest compensation trends in their individual industry
(Oelz, Olney & Tomei, 2013). While attaining the audit analysis, the primary goal is to locate the
competitiveness in those particular occupations and the demands of the external market.
Therefore, the main question that arises here is the profession expanding or declining (Code,

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Code & Italiana, 2016). Thus, it is necessary to gather attention towards the market changes and
to continue with the latest changes because failing to cope with the competitors will lead to
losing efficient employees.
c. A performance management system:
A performance management system is another essential aspect to deal with and it is
necessary to structure performance management processes to assure the employees while
meeting the corporate goals in the organization (Xavier, 2014). The employees should be
coordinated and assessed appropriately on a daily basis. The process will be associated with the
enhancement of learning the annual objectives, overall performance appraisals, and well-
developed processes for mentoring and coaching the employees (Ringelhan, Wollersheim &
Welpe, 2015). Compensation methods can be applied positively and will affect employee
management and developing workers’ productivity (Shields et al., 2015).
d. The benefit package:
The benefit package is associated with several organizations by utilizing benefit packages
that will be added to one’s salary in order to attract as well as retain the workers. The primary
objective should be occupied with competitiveness in various factors such as health care, tuition
reimbursement and retirement, and several other advantages (Magnan & Martin, 2019). In this
way, it will help the employees that they will accept or reject the position of that organization.
Even it will benefit them in leaving or staying in that same organization. Therefore, benefits will
definitely attract the employees where a handsome set of benefits are offered to them and they
will not leave that organization.

7ADVANCED REMUNERATION SYSTEM
e. Structured administration:
Lastly, structured administration is the ultimate business process that helps in enhancing
salary audit, the annual review process, processing timeline and so on. It will make sure that the
employees are responsible for all the areas of compensation. A comprehensive strategy of
compensation should be added to the foundation for generating an ambiance that will identify
and will distribute rewards to the employees for effective performance (Bussin, 2014). It will
benefit them to develop a firm cultural background for adequate employee engagement.
Therefore, the organization will get success when they will hire appropriate right individuals for
the desired position. It will help them to recognize the correct people and they should be awarded
for their hard work and dedication towards their position.
In this way, the organization will benefit in their profit scorecard as well as will help to
understand who is a better candidate to rise in a particular position. Rewards and incentives will
pave their way towards success.
Conclusion
Therefore, O’Meara Electronics Company can utilize all the strategies including budget
allocation, salary audits, performance management system, benefits package, and structured
administration will help them to secure all the right candidates for their organization. The first
and foremost thing, they need to acquire budget allocation. In this way, they will develop a
medium set of a budget and will evenly distribute salaries as per their knowledge, skills and
efforts are concerned. Thus, the person-based remuneration system is the finest and reliable
option to apply for all the employees and it will benefit all the employees irrespective of their
higher or lower position in the organization.

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