Report on Remuneration Strategy for Star Industries (BSBHRM505)

This report presents a comprehensive analysis of Star Industries' current remuneration strategy and proposes a new, improved strategy to address employee retention issues. The report begins with an introductory letter from the HR manager highlighting the problem of staff turnover due to inadequate remuneration policies. It then outlines the aims of a new remuneration strategy, focusing on attracting and retaining employees, while also benefiting the organization. The report delves into the external and internal factors influencing remuneration strategy, including the labor market, cost of living, labor laws, economy, business strategy, and job evaluation. It explores different job evaluation methods, concepts of relativity/equity (internal, external, and interpersonal), and steps to validate employee claims. Furthermore, it discusses the market position Star Industries needs to acquire, benefits and incentive structures, and the impact of FBT on salary packaging. The report concludes with a discussion on Star Industries' position as an employer of choice, providing a detailed framework for a revised remuneration strategy to enhance employee satisfaction and organizational success. The report also includes an executive summary and a table of contents for easy navigation.

Running head: HUMAN RESOURCE MANAGEMENT
July 5, 2019
(XYZ)
CEO OF Star Industries
(Address)
Dear sir/ma’am
I am compelled to write this letter to you because of the alarming situations that have rising
in your esteemed organization Star Industries. Staff turnover is becoming a big issue in the
company because of the remuneration policy that the company follows which is not attracting
the employees and thus the employees are leaving for better opportunities. This issue has
been affecting the company immensely negatively. In the exit interviews most of the
employees have complaint and expressed dissatisfaction because of the condition of the
workplace and for the poor strategies in terms of remuneration. I would like to propose a
remuneration strategy that will help in attracting the employees and make them retain in the
company, I would also like to propose some ideas that will help in changing the conditions of
the workplace and would also like to propose the strategy so that it benefits the esteemed
organization.
I would be highly obliged if you go through the proposed strategy and consider it so that it
may bring positivity and benefits to the employees of the organization and to your esteemed
organization, Star Industries.
Sincerely

1HUMAN RESOURCE MANAGEMENT
(Name of the HR manager)

2HUMAN RESOURCE MANAGEMENT
HUMAN RESOURCE MANAGEMENT
Name of the Student
Name of the University
Author Note

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Table of Contents
Executive Summary...................................................................................................................3
Question 1..................................................................................................................................4
Aims of remuneration strategy...............................................................................................4
The aims of the strategy for the organization.....................................................................4
The aims of the strategy for the employees.......................................................................4
Question 2..................................................................................................................................4
Impact of the factors that will help in developing remuneration strategies...........................4
5 external factors that Star Industries needs to consider while developing remuneration
strategies.............................................................................................................................4
5 internal factors that Star Industries needs to consider while developing remuneration
strategies.............................................................................................................................5
Question 3..................................................................................................................................6
Job evaluation.........................................................................................................................6
3 methods that Star Industries can use to evaluate jobs.........................................................6
Question 4..................................................................................................................................7
Concepts of relativity/equity..................................................................................................7
Internal relativity/equity.....................................................................................................7
External relativity/equity....................................................................................................7
Interpersonal relativity/equity............................................................................................7
Question 5..................................................................................................................................7

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Steps to validate the claim by the staff...................................................................................7
Methods to validate the claim by the staff.............................................................................7
Question 6..................................................................................................................................8
Market position Star Industries needs to acquire to create new remuneration strategy.........8
Benefits and incentive structures Star Industries might adapt...............................................8
Question 7..................................................................................................................................8
Impact of FBT on salary packaging.......................................................................................8
Question 8..................................................................................................................................9
Position of Star Industries as employer of choice......................................................................9

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Executive Summary
This paper is a case study of the company Star Industries which is currently facing issues in
terms of employee retention because of the unfavorable remuneration policies that the
company follows. This paper will provide a new remuneration strategies and policies that will
help the company in retaining their employees, some strategies that will help in improving
the current condition and the situation of the workplace and will also help build a new
structure which will be beneficial for the organization.

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Question 1
Aims of remuneration strategy
The aims of the strategy for the organization
Star Industries is a successful company based in Australia. This company recently has
been facing problems because of the remuneration strategies and policies that the company
provides to the employees which have resulted in employee turnover for the company.
Currently Star Industries is far behind in terms of their employee benefits and remuneration
strategies. Star industries provides general benefits to their employees like casual leaves and
sick leaves however does not provide extra benefits to the employees like other industries are
currently providing like rewards and recognition and other benefits like leaves and health
facilities. This is the issue that has led the employees of the company to look for jobs where
they are valued and are provided adequate benefits. This is the sole reason why the company
needs a remuneration strategy
Star Industries for this reason has to come up with new remuneration policy that will help
the company in curbing this problem and this issue. The aim of the remuneration strategy is
the following:
 To make sure the remuneration strategy attracts employees and provides them with
benefits that will pave way for employee retention.
 To make sure that the employee as well as the organization benefits after the
remuneration strategy.
 To facilitate the performance of the employees and motivate them to provide the
company with positive and good performance which will later help in contributing to
the success of the company.

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The aims of the strategy for the employees
The aims of the strategies for the employees are the following:
 To make sure the employees are satisfied in the environment of the workplace
 To make sure that the employees are benefited and are provided the necessary leaves
and remuneration they deserve
 To make sure the employees are motivated and help in facilitating the performance of
the employees which will result in the fruitful outcomes by the employees for the
organization.
Question 2
Impact of the factors that will help in developing remuneration strategies
5 external factors that Star Industries needs to consider while developing remuneration
strategies
In order to make and come up with a new remuneration strategy Star Industries needs
to consider some external factors which will help in enhancing the remuneration strategies.
Labour market- The demand for labour has a huge impact on the remuneration strategies
and it highly influences the salary fixation and the wages of an employee1. Star Industries is
currently having a huge employee turnover therefore there is a demand of employees in the
company. It is important to offer high wages to the skilled labors that benefit the organization
thus Star Industries needs to consider this factor while making remuneration strategies.
1 De Groen, Willem, and Ilaria Maselli. "The impact of the collaborative economy on the labour market."
(2016).

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Cost of living- Cost of living is an important factor which needs to be taken under
consideration while making a new remuneration strategy. This is something one organization
needs to consider especially during the period when the prices rise. Cost of living must be
considered to ensure that the salary that the company is offering benefits the employees and
make sure they can avail basic necessities2. Star Industries need to set the salary depending
on the consumer price index (CPI)
Labor laws- Labour laws have been introduced in many countries for the employees and
make sure they get a specific remuneration for the work in order to attain quality of life3. Star
Industries needs to make sure that the remuneration strategy follows the laws which are
proposed by the government of the country.
Economy- Economy has a huge impact on the salary fixation of the employees. In most of
the cases it is seen that the cost of living will increase and rise in an economy that is
increasing. Moreover the health of the economy exerts a huge impact on remuneration
decisions4. Star Industries needs to consider the economy of Australia while making a new
remuneration strategy.
Society- Star Industries needs to consider and understand the society and make remuneration
strategy which is ethical and will help the employee in order to attain a quality of life which
the country offers to its people.
2 O’Meara, KerryAnn. "Half-way out: How requiring outside offers to raise salaries influences faculty retention
and organizational commitment." Research in Higher Education 56, no. 3 (2015): 279-298.
3 Kaiser, Cheryl R., Brenda Major, Ines Jurcevic, Tessa L. Dover, Laura M. Brady, and Jenessa R. Shapiro.
"Presumed fair: Ironic effects of organizational diversity structures." Journal of personality and social
psychology 104, no. 3 (2013): 504.
4 Henderson, Troy. "Public sector austerity and its spill-over effects." WAGES CRISIS (2018): 115.

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5 internal factors that Star Industries needs to consider while developing remuneration
strategies
Star Industries needs to consider some internal factors that will help in making a new
remuneration strategy
Business strategy- The business strategy of an organization should determine the salary to
their employees. In order to grow rapidly the company needs to offer higher remuneration in
comparison to their competitors however if the strategy of the organization is to protect the
earnings due to the reducing fortunes of the organization then the remuneration needs to
below average or average5. Star Industries needs to assess their current business strategy and
make a remuneration strategy based on that.
Job evaluation- Every employee gets a different salary on the basis of their performance and
their designation thus Star Industries needs to differentiate the different hierarchy of jobs in
order to create a new remuneration strategy6.
Experience- Experience helps in enhancing the skills of an employee and helps in providing
better outcomes due to the knowledge gained7. Star Industries may consider the experience of
an employee in order to make new remuneration strategies.
Potential- Employees are often paid more even though they do not have a lot of experience
based on their potential to perform8. Star Industries needs to assess the potential of their
5 Kownatzki, Maximilian, Jorge Walter, Steven W. Floyd, and Christoph Lechner. "Corporate control and the
speed of strategic business unit decision making." Academy of Management Journal 56, no. 5 (2013): 1295-
1324.
6 Rubel, Mohammad Rabiul Basher, and Daisy Mui Hung Kee. "High commitment compensation practices and
employee turnover intention: Mediating role of job satisfaction." Mediterranean Journal of Social Sciences 6,
no. 6 S4 (2015): 321.
7 Bilan, Yuriy, Halyna Mishchuk, and Tetiana Dzhyhar. "Human capital factors and remuneration: analysis of
relations, modelling of influence." Business: Theory and Practice 18 (2017): 208.
8 Mitra, Atul, Aino Tenhiälä, and Jason D. Shaw. "Smallest meaningful pay increases: Field test, constructive
replication, and extension." Human Resource Management 55, no. 1 (2016): 69-81.

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employees and make remuneration strategies which will help the employees with potential to
work better.
Seniority- Seniority is one of the important criteria for pay increase as they serve the
organization for a long period of time9. Star Industries needs to make new remuneration
strategy keeping the employees in mind and the increment structure.
Question 3
Job evaluation
Job evaluation is defined as the process of understanding the worth of the different
jobs that are present in the organization in order to provide different wages according to the
worth of the jobs in an organization. This is often related to the value that is produced on
several factors like skill, effort, working condition and responsibility.10
3 methods that Star Industries can use to evaluate jobs
Star Industries may consider the different methods in order to evaluate job in order to
create a new remuneration strategy
Ranking method- In this method the jobs are ranked from highest to lowest based on the
importance of the job in an organization. Here the jobs are compared and then ranked on the
basis of their complexity in performing the job and content11. Here the job is analyzed
9 Downes, Patrick E., and Daejeong Choi. "Employee reactions to pay dispersion: A typology of existing
research." Human Resource Management Review 24, no. 1 (2014): 53-66.
10 Latif, Muhammad Shahzad, Mushtaq Ahmad, Muhammad Qasim, Momal Mushtaq, Ambe Ferdoos, and
Hummayoun Naeem. "Impact of employee’s job satisfaction on organizational performance." European Journal
of Business and Management 5, no. 5 (2013): 166-171.
11 Novaković, Jasmina. "Toward optimal feature selection using ranking methods and classification algorithms."
Yugoslav Journal of Operations Research 21, no. 1 (2016).

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thoroughly. Star Industries can use this method as this is inexpensive and this will help the
company to evaluate jobs based on their importance within the company.
Job grading method- In this method the grades and classes of the jobs are determined before
and then the jobs are assigned to the employees and then the job is evaluated12. Star Industries
can use this method as employees highly accept this method and in this method the entire
jobs are compared with different job and are not segregated into factors. This method is not
that subjective which will make the work easier for the organization.
Point-ranking method- In this method the key factor of a job is identified and later the sub
factors of the job are determined. Later the sub factors are evaluated on the basis of the
importance13. Star Industries should use this method for evaluating jobs as this is a method
which is free of errors as the jobs are looked from all perspectives.
Question 4
Concepts of relativity/equity
Internal relativity/equity
Internal equity is defined as the comparison of the positions within an organization in
order to ensure that the employees of an organization are getting paid equally. The employees
of an organization must understand this or else this might result in employees feeling
12 Shaout, Adnan, and Mohamed K. Yousif. "Performance evaluation–Methods and techniques survey."
International Journal of Computer and Information Technology 3, no. 5 (2014): 966-979.
13 Miyake, Yuki, Wataru Kumagai, Kenichi Tamura, and Keiichiro Yasuda. "Search point ranking‐based
adaptive cuckoo search." IEEJ Transactions on Electrical and Electronic Engineering 13, no. 7 (2018): 1075-
1076.