Comprehensive Analysis of Compensation Strategies at The Fit Shop

This report examines the compensation strategies at The Fit Shop, a company selling fitness equipment. The analysis focuses on the roles of base pay, performance pay, and indirect pay for different positions, including managers, sales staff, physiotherapists, and kinesiologists. The report provides a rationale for each type of compensation, considering factors such as employee motivation, equity, and organizational outcomes. Furthermore, it identifies and elaborates on realistic alternatives for the company to consider, drawing on concepts from chapters 4 and 5 of the textbook. These alternatives include market-based pay structures, broadband structures, pay audits, merit pay, overtime payment systems, and flexible work arrangements. The report aims to provide a comprehensive understanding of how The Fit Shop can optimize its compensation system to attract, retain, and motivate employees.

Running head: COMPENSATION AT THE FIT SHOP
Compensation at The Fit shop
Name of the student
Name of the University
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COMPENSATION AT THE FIT SHOP
Table of Contents
Introduction................................................................................................................................2
Role of compensation in Fit Shop Limited................................................................................2
Approaches to compensation system.........................................................................................4
Conclusion..................................................................................................................................6
References..................................................................................................................................7

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COMPENSATION AT THE FIT SHOP
Introduction
Compensation and the benefits refers to sub-discipline of the human resources that
lays emphasis on the aspect of compensation along with the benefits policy making in a
company. Compensation refers to total cash along with the non-cash payments which is paid
to the employees in exchange of the work that they do in an organisation (Feng-e, Ning &
Xiao-fei, 2017). Base pay is indicative of portion of the compensation of an individual which
is on the basis of the time that has been worked and not on the basis of the output that has
been produced. Indirect pay is indicative of elements of the remuneration which is inclusive
of the benefits that are paid to a person along with the basic wage. Performance pay
distributes the financial rewards to the employees on the basis of the contribution of the
individual in a company. Fit shop Limited refers to the brand-new firm that sells all kinds of
the training, fitness along with exercise equipment to general public. The company provides
the customers with the personalised advice that helps in meeting the specific needs of the
customer. This report discusses about role which is played by base pay, indirect pay along
with the performance pay for the different professional positions in The Fit Shop. This report
identifies the specific approaches that can be adopted in the organisation.
Role of compensation in Fit Shop Limited
A crucial role is played by the base pay and the performance pay in a company that
helps in providing the encouragement to the employees. The workers of The Fit Shop are
paid the salary on the basis of:
 Basic
 HRA
 Transport Allowance
 FBP Allowance
The managers have a crucial role to play an organisation and the base pay system
helps the managers in handling various kinds of responsibilities in a company (Malik, 2018).
The payment of the base pay would make the manager in the application of the advanced
education along with the specialized skill set that can be instrumental in improving the
performance of employees of company.

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COMPENSATION AT THE FIT SHOP
There are many organisations in the present age who are involved in selling the
training, fitness along with the exercise equipment and the higher base pay of the managers
can encourage them in improving the quality of their work in the company. The base pay
system proves to be of great benefit for the sales staff as it helps in the maintenance of the
internal along with the external equity in relation to the remuneration which is paid to the
employees. The physiotherapist and the kinesiologist would be benefitted with the help of the
base pay system that would encourage them to personally be of help for the customers
(Morrell & Abston, 2018).
The performance pay system in the organization would make the managers
understand the needs of the sales staff, physiotherapist along with the kinesiologist that can
bringing about an improvement in the organizational outcome. The sales staff would be
greatly benefitted with the help of the performance pay system as it would make them listen
to the individual concerns of the customers that can have a direct impact on the sales of the
company. They are provided with the performance pay that helps in increasing their
performance in company.
 Small group incentives
 Profit sharing
 Merit plans
The payment which is on the basis of performance would make the physiotherapist along
with the kinesiologist in providing training to the employees about the functionality of the
various equipments in the organization and how they can prove to be advantageous for the
workers.

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COMPENSATION AT THE FIT SHOP
The indirect compensation can help the managers in taking the opportunity of the paid
holidays along with the vacations that can help the people in getting the relaxation and respite
from the daily burden of the work (Kadir, AlHosani & Fadillah Ismail, 2019). The sales staff
can be merited with the help of the social security programs and it can provide them with the
financial assistance in the event of employees retiring from the company. The sales staff in
The Fit Shop would be able to get the benefits in the event of facing any kind of the job-
related injuries by taking recourse to the indirect compensation system that can have positive
effects on the outcome of the company. Indirect compensation that is paid to the employees
in The Fit Shop are:
 Paid Holidays
 Social security programs
 Health Insurance
 Life Insurance
 Child care
Approaches to compensation system
There are realistic alternatives which can be adopted by The Fit Shop that can provide
a boost to the employees working in the company. The base payment which is provided to the
employees should be on the basis of the market-based structure that can make the employees
deliver the optimal performance in a company (Beck-Krala & Klimkiewicz, 2016). The
broadband structure can be made use of in the organisation that can prove to be more flexible
for the employees who are working in a company. The pay audit can be carried out in a
company that can help in the identification of the pay disparities in the company on the basis
of race, gender along with the disability in the organisation. The merit pay can be provided to
the workers of the organization that can encourage the employees to continue the good work
in the company (Hoque et al., 2018).

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COMPENSATION AT THE FIT SHOP
This kind of the performance pay brought into The Fit Shop can augment the level of
the performance of employees that can aid in the growth of the organization. The raises can
be on the basis of the seniority of the employees or the skill improvements that can contribute
to increasing the overall performance of workers (Kee, bin Ahmad & Abdullah, 2016). It can
be helpful in providing the feedback to the employees and the merit raise can help in the
retention of the employees of the high calibre.
The Fit Shop can provide the opportunity of the overtime payment system that can
provide the workers with adequate allowances along with the facilities in the event of
working overtime. The transport facilities can be provided to the workers that can prove to be
advantageous for the outcomes of the organization. It can make the workers to work for a
longer duration of time when compared to that of the flat hourly rate. The company can
provide the flexible timings to workers that can help them in working in a convenient
manner. It can cast a positive influence on the company that can help the organization in
getting ahead in the competitive environment.

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COMPENSATION AT THE FIT SHOP
Conclusion
The managers are an integral part of the company and base payment system can aid
managers to deal with various kinds of responsibilities in the company. Sales workers can be
provided with the performance pay system that can make them listen to concerns of
consumers. The Fit Shop can provide facility of overtime payment system which can be
instrumental in providing workers with allowances and that of facilities.

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COMPENSATION AT THE FIT SHOP
References
Beck-Krala, E., & Klimkiewicz, K. (2016). Occupational safety and health as an element of a
complex compensation system evaluation within an organization. International
journal of occupational safety and ergonomics, 22(4), 523-531.
Feng-e, S., Ning, S., & Xiao-fei, W. (2017). Job Consumption: Compensation or Benefit
Expropriation. Journal of Guizhou University of Finance and Economics, 35(03), 34.
Hoque, A. S. M. M., Awang, Z., Siddiqui, B. A., & Sabiu, M. S. (2018). Role of employee
engagement on compensation system and employee performance relationship among
telecommunication service providers in Bangladesh. International Journal of Human
Resource Studies, 8(3), 19-37.
Kadir, A. A., AlHosani, A. A. H. H., & Fadillah Ismail, N. (2019). The Effect of
Compensation and Benefits Towards Employee Performance.
Kee, L. B., bin Ahmad, R., & Abdullah, S. M. (2016). Relationship between financial
compensation and organizational commitment among Malaysian bank workers. Asian
Business Research, 1(1), 75.
Malik, A. (2018). Strategic Compensation and Benefits Management. In Strategic Human
Resource Management and Employment Relations (pp. 133-139). Springer,
Singapore.
Morrell, D. L., & Abston, K. A. (2018). Millennial motivation issues related to compensation
and benefits: Suggestions for improved retention. Compensation & Benefits
Review, 50(2), 107-113.
Reading Material
Chapter 4: Components of Compensation Strategy
Chapter 5: Performance Pay Choices