Compensation and Benefits: A Report for Winter 2020 Semester

This report assesses the compensation and benefits system at Simply Literature Production. The current system, characterized by the owner's arbitrary decision-making, lacks structure, fairness, and effective communication. It fails to meet the criteria of a proper compensation system, leading to high employee turnover and disengagement. The analysis identifies issues such as unfair pay, lack of transparency, and a flawed performance appraisal process. Recommendations include establishing a formal human resource management department, implementing a systematic and fair compensation policy, and linking pay to a performance appraisal system to improve employee motivation and ensure fair treatment. The report emphasizes the importance of transparency and communication during these changes. References are provided to support the analysis and recommendations.

Running head: COMPENSATION AND BENEFITS
Compensation and Benefits
Name of the Student:
Name of the University:
Author Note:

1COMPENSATION AND BENEFITS
1. Assessment of compensation system
The compensation system in the Simply Literature Production is in complete disarray.
The problem with the company starts with the organizational structure. The owner, Ravi is
the head of any decision making and the managers and the supervisors lack the authority in
their line of work (Idowu, 2017). This has led to confusion and delay in processes. The
employees have to work over time without payment and they do not always get the holidays
that they are entitled to. The compensation system is based on the will of the owner, Ravi. He
decides the basic pay during appointment as per his wish, increases their payment
sporadically and without no proper justification and distributes the rewards whimsically.
This do not meet the criteria of proper compensation system as it does not have any
specific goal or objective, does not use accurate information for the decisions and no
integration to organizational motivational system. The compensation system is not
communicated effectively to the employees which creates resentment among the employees.
The performance assessment system is also not fair (Mulvaney, 2019). Thus, the system
violates all of the criteria that constitutes fair compensation system.
2. Assessment of compensation system
The company policies and the unfair pay and reward system has led to the high
turnover of the employees. The new employees feel that they are undervalued as they receive
lesser rewards than the older employees. The concepts that are related to the scenario are
employee disengagement due to unfair reward policy, lack of employee motivation and
absenteeism. Employees who feel undervalued in workplace are likely to appear lesser or late
for their work. They are also likely to leave jobs when the compensation they receive are
lower than the other employees working with her (Makhija & Agarwal, 2019).

2COMPENSATION AND BENEFITS
The compensation system of the company is neither fair nor based on evidence. It is
also not an effective mechanism for proper appraisal of the employees. It violates the
principles such as equal pay, transparency, communication, structured reward system and a
performance based approach. While the worth of the employees does not depend on the
successful jobs that they have done but also the devotion and commitment that they have
shown to the company. The unfairness of the compensation system is further highlighted by
the method that the owner distributes the yearly bonus. He scribbles some figures as per his
wish and gives less to employees about whom he has been complained about. He does not
remember about the cause (Rusu, Avasilcăi & Huţu, 2016). This makes deserving employees
suffer.
He is also partial to the male employee and thus equal pay is not his concern. The
problem with the company is that they have no accounting, finance or human resource
management department. This leads to mismanagement and budget allocation becomes
problematic. This has led to the current situation where the bank accounts are drained out.
The lack of transparency about the process of pay also makes employees confused about what
they should do to get better reward (Ahmad et al., 2019). The effectiveness is also violated
when due to the unevenness and lack of structure has led to lack of control on budget
allocation and has created higher cost for production. He believes that employees should be
awarded but does so only through monetary payment.
The company needs to go through several changes in order to successfully manage
their pay and reward system and improve their financial condition. First, they need to
establish a formal human resource management and accounting department in order to
manage the employees of the organization (Mulvaney, 2019). Second, their aim should be to
establish a systematic and fair compensation policy and communicate with the employees.
Finally, they should ensure that the employees are appraised regularly and the compensation

3COMPENSATION AND BENEFITS
has some relation to the effort that they put into their work. These changes might make the
employees wary. It is the job of the employer and the human resource department to ensure
the employees about the changes and communicate information transparently.
3. Recommendations
The company Simply Literature must implement performance appraisal system for the
systematic review of the employees (Mohrman & Lawler, 2017). Moreover they should also
relate pay and reward system with the performance appraisal. The advantage of doing that is
it is universally acknowledged method and is extremely effective in managing reward system.
An effective appraisal system motivates the employees and improves their devotion to the
company. Linking pay to the appraisal system will also help in keeping a track of the
payment raises and the employee work records. A systematic and performance based pay
raise will also ensure that employees receive fair treatment and men and women are paid
equally. This is also effective in improving the motivation of the employees (Idowu, 2017).
The only disadvantage about this change is that many employees may resist the changes and
employers must manage them and remain transparent about them.

4COMPENSATION AND BENEFITS
References
Ahmad, I., Danish, R. Q., Ali, S. A., Ali, H. F., & Humayon, A. A. (2019). A Comparative
Study of Banking Industry Based on Appraisal System, Rewards and Employee
Performance. SEISENSE Journal of Management, 2(1), 1-11.
Idowu, A. (2017). Effectiveness of performance appraisal system and its effect on employee
motivation. Nile Journal of Business and Economics, 3(5), 15-39.
Makhija, P. A., & Agarwal, V. V. (2019). A STUDY ON EMERGING TRENDS IN
PERFORMANCE APPRAISAL IN 21st ERA.
Mohrman, A. M., & Lawler, E. E. (2017). Motivation and performance-appraisal behavior.
In Performance measurement and theory (pp. 173-194). Routledge.
Mulvaney, M. A. (2019). Examining the Role of Employee Participation, Supervisor Trust,
and Appraisal Reactions for a Pay-for-Performance Appraisal System. Public
Organization Review, 19(2), 201-225.
Rusu, G., Avasilcăi, S., & Huţu, C. A. (2016). Organizational context factors influencing
employee performance appraisal: a research framework. Procedia-Social and
Behavioral Sciences, 221, 57-65.