Analysis of Remuneration Systems: O'Meara Electronics Case Study

This essay provides a detailed analysis of remuneration systems, specifically in the context of the O'Meara Electronics company. It begins by outlining the purpose of the paper and its relevance to the case study, which involves a company facing declining profitability and market position. The essay ...Read More

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Remuneration system
[Type the document subtitle]
3/31/2020
student name

Remuneration system 1
Remuneration system
Remuneration as per the literature reflects financial compensation offered to the
employees in exchange of their services provided to the organisation. There are number of
complimentary benefits that are added as part of remuneration mechanism. This is one of the
component that reflect reward management, every organisation consider different form and
approaches for rewarding, rating an employee. Some organisation consider Remuneration
system to be based on person who is attaining the job profile and other organisation may take
performance system based on the position at which an individual is being performing
(Akkermans, Brebbibkmeijer, & Blonk, 2015). This literature will consider the case of
O’Meara electronic company.
The company has been operating since last 20 years in general electronics sector of
Australia with the subsidiaries in formations. The company has been offering various
products like semi-automated factories, electronic technicians, electronic engineers who have
been helping the organisation in order to acquit meant designing, telephones, digital cameras
and television designing (Schaufeli & Taris, 2015). The company employee various staff
members for production, development, dispatch department, storage and marketing
department along with human resource, General administration and accounting department.
This reflects that the company has been employing more than thousand staff members
associated.
The question to be analysed is the remuneration system of the company. As this is one
of the critical aspects to consider by the company due to large employment opportunity. In
2016 the crisis arises for the company that declined the profitability of the company and
reduce the market position. However company needs to consider performance management

Remuneration system 2
and need to revise remuneration management strategy so as to effectively make the staff work
with cost effective ways as well.
There are two alternative options for the company to consider that this position base
remuneration system which the company has already adopted since day one and another is
performance-based remuneration system. Through position base remuneration system it is
reflected that the job based pay will be acknowledged for every individual. Jobs
specialisation reflected the depth of related knowledge, expertise and experience which
reflect employee to conduct a task. Every employee is found to be specialist in their own
work which reflects that the designated task is as per the performance of the person. It has
been analysed that the position pays compensation method has improve the performance of
the employees and motivate them to perform better as they have to rank up to another
position (Gordon, 2012). Some of the advantages of this method of position system include
structural based structure off pay scale based on hierarchy in organisation (Fang & Gerhart,
2014). Other than this, it is found that this system is simpler as person-based system on the
contrary would be to analyse various constraints in the organisation that is to identify the
knowledge, competencies and skills on the basis of some benchmark for which the revert will
be provided. Other than this the advantage also reflects that the pay structure considering this
system has been adopted by most of the companies which reflect that the competitive
comparison could easily be done. This system also creates an illusion within the organisation
towards the career path and promotion possibility for which the people are considered to
perform better (Bombiak, 2018).
However the system has various disadvantages as well, to critically analyse it can be
said that the system reinforces the bureaucracy and hierarchy. Moreover, this is found to be
less compatible with the incentive and team-based structures. Another disadvantage is that a
job holder or the position holder may not be enough competent as per the position in the

Remuneration system 3
organisation and receiving higher pay than the one who is more competent. This system also
encourages compromised job valuation and compromising honesty in descriptions of job
(Heap & Singh, 2016).
On the other hand person based remuneration system reflects the structure of payment
system in the organisation, based on employee rather than the position. The person that is
working is being considered as rewarding system rather than the job which he is performing.
The offered salaries for employees are calculated on the basis of individual aspect rather than
the position in which he or she is been performing in the organisation (Van, Derks, & Bakker,
2018). This type of remuneration system is generally aimed to ensure that the payment
provided to an individual is based on a person’s knowledge, skills, and competencies. This
system is bifurcated in skill-based payment system and competency-based payment system. It
has been identified that with this system of rewarding method the level of motivation among
all the levels of management is higher that is towards working hard in the organisation. They
are aware that their own competency skills knowledge and expertise will help them getting
better pay in near future (Van, Lens, & Whitte, 2008).
However, every system is found to have some advantages and disadvantages based on
the suitability in the organisation. However, the ambitious people in the organisation are
more awarded as compared to the people who are at a good position but are not competent
enough to perform well in the organisation. This reflects the contribution of every individual
and the organisation and reflects better to be job based structure rather than just following the
hierarchy. In this method the skill based structure reflect association of the salaries, wages
and reward based on the extent of job and complexity that is being considered by every
individual (Javed, 2015). Skill base pay system among the system is associated with blue-
collar jobs that are the people working at lower management hierarchy or as labours.
Focusing towards the manufacturing sector like in case of O’Meara Company this system has

Remuneration system 4
a strong assembly and presents towards work involved and particular nature of work. The
major advantage of this system is one can hire less quantity of the workers but depend them
on more aspects and work to be done by each individual. Competency Base remuneration
plan reflect the organisation to give authority to decide on the compensation plan and
consider reward of individual based on their performance considering the attributes that has
been used by the individual towards operations (Sohal, 2008).
Some of the advantages that have been identified through performance based
remuneration system are no seniority factor, it has been analysed that the people with less
competencies are also at the higher position due to their experience of years rather than
increase experience in competencies. This reflects remuneration system on individual
performance rather than the name of the position at which an individual is being performing.
The focus of this system is strictly towards the performance of employees with relation to
skills and competencies (Recker, 2013). There is no obligation of the organisation to pay his
dues as he or she is at greater position. Another advantage is culture of improvement.
Considering the person based remuneration system the improvement scope is always
presented in the organisation. It has been identified that people are trying to perform better in
order to show improvement in their performance and competencies, this also reflect self-
development for the employees and growth of the organisation which reflect culture of
improvement of the organisation (Armstrong, 2017).
However there are some disadvantages of performance-based remuneration system
like subjectivity. Since there is no particular criteria when it comes to reward system,
Company this remuneration system lack at selection of criteria which could reflect the
potential drawback for this system. This also increases the work of the human resource
manager as he or she needs to set the criteria which must be applicable to each performance,
position and job description in the organisation (Nolan & Garavan, 2016). For instance an

Remuneration system 5
individual with the ability to multitask result at the probability of inaccurate rate system in
person based remuneration system. Another major drawback of this system is favouritism
(Bradler, 2016). It can be said that the decision making power is in the hands of few
individuals when it comes to remuneration, which could result in to favouritism towards
particular person in the organisation rather than another who is more competent. This reflects
the person with less friendly or good relation with HR manager may face lower reward and
compensation. On contrary with the person who is more friendly relations with the HR
manager or the team who is being identifying the criteria for competency based employee
plan. Unfair practises could be identified in this remuneration system which could also reduce
the motivation among some of the employees and may create negative environment in the
organisation (Bailey, 2018).
Considering the change in remuneration system for O’Meara electronic company,
which has been currently following position based remuneration system. The remuneration
system includes the base salary plus the incentive and bonus that is paid as the basis of
reward to the employees contributing towards the organisation. Considering the new
remuneration management system that is recommended to this company includes change in
person-based management system to performance-based management system. It has been
identified that by now the company has been considering position Base management system
which will be continue for the base salary. However it is recommended to consider
incentives, compensation and rewards above the base salary based on the performance
management system (Coetzer & Rothmann, 2007). This reflects that the organisation could
have integrated the two remuneration management system so as to make the final payment to
the employees. This reflects that the base salary will be remain the same based on the
position beast premonition system. The reason being in case the complete change is
implemented in the organisation that is converting the position based to performance-based

Remuneration system 6
remuneration system the resistance from the employees will be much higher, especially on
the high manager at hierarchy.
Therefore it is recommended to the company to integrate performance-based
remuneration system from now onwards. This reflects that the base salary along with the
reward system and compensation system will be done on the performance space that is the
personal individual based considered from next appraisal cycle. It has been identified that the
company have appropriate appraisal cycle in which every individual is appraised and a salary
hike is being provided (Van, Derks, & Bakker, 2018). However considering the new
remuneration management system, the company will consider performance of every
individual while evaluating the percentage of appraisal for the employees. This may include
considering criteria of performance and competencies so as to evaluate and provide rating to
each individual based on their performance in last year considering their position and job
description (Gabriel, 2016).
Other than this the incentive plan would also be based on the performance rewarding
management system which will reflect that each individual will be rewarded with additional
incentive plan based on their performance in the organisation. The reason for this change in
remuneration system is that the company would overcome the problems that has been facing
by the company along with the base salary is not changed which will not reduce the
satisfaction of the employees or may not create a reason for dissatisfaction for the existing
employees. Therefore, it can be concluded that the recommended remuneration system for
this company is integration of position based remuneration system which has been conducted
by now and changing the remuneration system to performance-based remuneration system
for future course of action.

Remuneration system 7
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