HRM 6123 Summer B-18: Strategic Compensation Case Study: Nutriment

This case study analyzes Nutriment, a biotech company facing staffing challenges as it prepares to launch new products. The company has hired Jack Stewart, an external consultant, to help establish a pay structure that attracts and retains specialized scientific talent, particularly in a competitive market. The analysis examines strategic considerations for establishing a pay structure, including industry structure, competitor analysis, and the company's SWOT. It also explores the need for a compensation survey to address potential pay disparities among scientists. The executive decisions section discusses market pay lines (market lag, lead, and match) and recommends a market-lead pay policy to attract top talent. The analysis emphasizes the importance of considering market dynamics and the company's financial position when formulating compensation strategies. The study provides recommendations for Jack to formulate the best compensation policy to retain employees.

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CASE SUMMARY
The given case tends to highlight details about a biotech company named Nutriment which has
done significant research and has come up with innovative products. As a result, the company is
in position to start the operations for which staff hiring is imperative. In this regards, an external
consultant named Jack Stewart has been hired. Even though Jack has experience with start up
technology firms, it is critical to note that the company needs to majorly recruit scientists which
have specialised knowledge and are of interest to rival firms also. IN this background, the pay
policy assumes importance and hence the various options available in this regards need to be
deliberated so that considering the current business scenario, a suitable policy is chalked out.
This policy needs to be ensure that the company is able to attract talent while ensuring that the
associated costs are kept to a minimum. Also, it is needs to be considered as to if there is any
need for a compensation survey on the art of Jack.
CASE ANAYSIS
a. The strategic considerations in order to establish a pay structure at Nutriment are as
highlighted below:
In the competitive market, Nutriment must consider and analyse their particular industry
structure, number of competitors, financial resources, SWOT analysis and other internal and
external market factors that can affect the pay structure of Nutriment (Price, 2015). For example,
Nutriment must use their strength to overcome their weakness and their opportunity to overcome
their threat in order to leverage competitive advantage. Also, Nutriment should take integration
of the external and internal pay rate so that company can decide a pay rate that would match the
position of the employee and would neither overpay nor underpay. It is evident from the case
that the company is involved in the process of making new findings, discoveries and unique
products and thus, is following an isolation business strategy due to the nature of their business.
The company is more concerned in recruitment, retaining the talented and valuable staff
members especially the team of scientists. Therefore, the strategies for the pay structure to retain
these members in the company are considered a significant decision for the growth and success
of the company. Also, it is noteworthy that Nutriment is having edge in the current market due to
their significant scientific discoveries, hence, the company would be considered as competitive
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environment for talented people (OECD, nd).. Further, Nutriment decides to expand their
business and therefore, they need 15 more employees which includes administration staff and
team of scientists. Also, the scientists are not general scientist, they must have specialize
knowledge and experienced so that they can contribute in the research process of Nutriment. In
this regards, they have hired Jack who is a Human Resource Management consultant and would
help Nutriment to get suitable man power for the company. Further, these employees have come
up with some strategic considerations, respective compensation amount and pay policy based on
their expectation and rates of competitors. Jack should do some survey to determine how the
company can get suitable employees in the competitive pay and then implement their knowledge
and experience to expand the business (Markham & Meyer, 2016).
b. Jack could potentially need a compensation survey considering the fact that majority of the
recruitment is for scientists which tend to work in a niche field which requires expertise. As a
result, there could be potential disparity in the pay grades of the scientists as well and hence
the average pay rate of a scientist might not be a parallel comparison. As a result, a market
compensation survey would be a suitable choice which can act as a base for more critical
decision with regards to the pay line or the pay structure business (Markham & Meyer,
2016).
EXECUTIVE DECISIONS
a. Pay line is generally used to refer the pay structure policy such as pay at, above the
competitive average or below the competitive average, market median and so forth. Pay line
also refers to the classification segment that indicates to the unique pay value association
such as monthly pay group, weekly pay group and other pay line.
Market Lag: It is considered a less recommended pay line strategy because in this, the company
employer would select a pay policy in which the employees would get less pay as compared with
the market pay rate. Company generally uses this strategy when they have limited financial
resources. However, company provides non-monetary rewards in regards to the process of
rewarding or pacifying them. Further, it is essential to note that, while practising this pay
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strategy, it is quite difficult for the company to retain the employees in the company due to the
less offered pay (Markham & Meyer, 2016).
Market Lead: In this strategy, the employer would decide to offer the pay higher than the
prevailing market pay. It is obvious that company is paying their employee higher amount which
finally leads to higher cost for the company. This type of strategy is more common at the place
where as labour market is highly competitive in nature and hence the offered pay is constantly at
par due to the dynamic market pay rates (Price, 2015).
Market Watch: This type of pay strategy is considered advantageous for the company because
the employer sets the pay for the employees based on the process of matching the market’s pay
rate. In this compensation strategy, the employer would not bound to decide on a higher pay to
the employees and rather satisfy the employees by giving them suitable pay based on the
competitive market par rate (OECD, nd).
It can be said based on the above pay lines that a company can adopt different pay line strategy
at different time period based on the nature of competitive market. For example, when company
is doing well, then they can easily adopt market lead pay policy or when the company is facing
finance crises, then they can go with market lag compensation policy. Hence, it can be concluded
that based on the position of the company and business scenario, the employer can select either
one or combination of different pay policies as discussed above (Markham & Meyer, 2016).
b. The main motive behind selection of suitable pay policy is to determine the factors that need
to be taken into consideration by the company in order to sustain in the market pay rate
changes and derived pressure. Hence, Jack should suggest a pay policy for Nutriment
because of the dynamic nature of the market. Any company has three main compensation
policies that can be adopted to retain the employees and to deal with the expected market pay
rate changes. This includes the fact regarding whether to match the market or lead the market
or lag the market at a given point of time based on the position of the company. Based on the
given factors, it can be said that company should go with market lead pay policy because
compensating the employees with higher salary would distinguish the company from the
leading competitors of the market (Price, 2015). Hence, Jack should suggest market lead pay
policy.
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References
Markham, L. & Meyer, W. (2016) Fresh Perspectives: Human Resource Management (3rd ed.)
Cape Town: Pearson Education
OECD (nd) Performance-related Pay Policies for Government Employees, Retrieved from
https://books.google.co.in/books?
id=T4HVAgAAQBAJ&printsec=frontcover&dq=pay+policy&hl=en&sa=X&ved=0ahU
KEwj0ldTs_azcAhULTY8KHUE7C90Q6AEIPDAE#v=onepage&q=pay
%20policy&f=false
Price, A. (2015) Human Resource Management (4th ed.), London: South Western
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